A production system consisting of a work station, a loading and unloading stations linked by a closed-loop material-handling system is considered. The material-handling system consists of two continuous line conveyors. Each conveyor is assumed to have a specified constant velocity, length and capacity. The work station is assumed to have a single machine, an unloading station and no local storage. In this production system the work pieces, which at their instant of arrival find the work station busy, are blocked. Those work pieces bypass the work station and are transported by the conveyor to the loading station to merge with the incoming work pieces to be transported to the work station again. The above production system is modeled by a G / G /1/0 queueing loss system with retrials, stationary counting arrival process, generally distributed service times, a single server and no waiting room. The flow of work pieces inside the system is modeled by a point process and is approximated by a renewal process. To analyze the asymptotic performance of the above system, a recursive procedure is developed. Furthermore, an expression for the asymptotic distribution of the number of work pieces along each conveyor is derived and is used to control the congestion along the material handling system. Finally numerical results are provided and compared against those from a simulation study.