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.