The Optimal Inventory Policy for Reusable Items with Random Planning Horizon Considering Present Value

Abstract

We discuss five areas of inventory model, including reusable raw material, EPQ model, optimization, random planning horizon and present value. In the traditional EPQ model, the stock-holding cost of raw material was not counted as a part of relevant cost. We explored the possibility of reducing a company’s impact on the environment and increasing their competitiveness by recycling their repair and waste disposal. The products are manufactured with reusable raw material. Our analysis takes into account the time value, and the present value method is applied to determine the optimal inventory policies for reusable items with random planning horizon. Results show how the heuristic approach can achieve global optimum. Numerical examples are given to validate the proposed system.