Optimal control of a hybrid periodic-review production inventory system with disposal

Due to growing environmental consciousness, limited availability of natural resources and enormous cost of waste disposal, recycling and remanufacturing of products are becoming more and more important. Reverse logistics is the process of producing and recycling a product. In this paper, a special structure reverse logistics system is considered. It contains two stocks. Items are subject to deterioration in either stock and the deterioration rate may be unknown. Units that can not be remanufactured are disregarded. The optimal control approach is developed to determine the optimal manufacturing, remanufacturing and disposal rates under a certain cost function. Illustrative examples are presented.