An inventory control model for product returns

With the growth of environmental concerns, the reuse of used products has received increasing attention so that a new field “reverse logistics” has emerged. Inventory management is one of its most important areas. Assuming an independent Poisson demand and returns process, an inventory control model based on returned product reused as “new” product by recovery is presented. An optimal control policy is derived and an algorithm for computing an optimal control policy is presented. Results indicate that the rates of returned product have a distinct influence on order quantities and expected profits of the seller. The results suggest that the seller should adopt efficient measures to decrease the rate of return of the product.