Abstract
Product recovery has received increasing attention in recent years. For a product recovery system, collection of used products is one of the key concerns. This article focuses on a special Local Collection Point (LCP) which handles a single type of used products. This special LCP can either to recover the used products and resell them in second-hand markets, or to deliver them to the Centralised Returns Center directly. For such a reverse system, we initiate and develop a joint inventory policy to improve its efficiency. The arrival process of used products, the handling/repairing time and the customer arrival process for repaired products are all assumed random. By formulating the system into a continuous-time Markov chain, the system's stationary distribution and its profit formulation are obtained. An algorithm for optimal inventory policies is developed. Managerial implications of the system characters and policies are discussed through the article.