Multiple Productions Inventory Model for Reusable Product with Shortage

In this open and competitive market, effective cost reduction and product value upgrade are important ways to increase competitiveness. Due to increasing environmental protection cost in the recent years, environmental consciousness in enterprise is becoming more and more important. One of the ways to reduce material cost and protect environment is to recycle resources. This study discusses an inventory model of reusable items with shortage. A mathematical model and a program are developed to derive the optimal solution with minimal total cost. Numerical examples and sensitivity analysis are carried out to analyze the influence of key parameters to the inventory system. The result of this study shows that the total cost is most sensitive to the percentage of reusable items and the demand rate. Optimal cost can be derived through proper control of the key parameters. The sensitivity analysis shows that inventory level and total cost can be reduced through a better demand forecast.