Optimal control policy for two stage reverse logistics system

For a remanufacturing reverse logistics system, the buy-back policy was considered, i.e., the remanufacturing firm will purchase used products to remanufacture, which make firm control the return of used product. A single product two-stage inventory control problem with random supply and random demand was proposed. The joint optimal dynamic decision of collection price and remanufacturing quantity was considered in order to minimize the finite horizon expectation cost of the whole system. The decomposition property that the optimal decision problem with two decision variables can be solved by two sub-problems with single variable was proved. And the optimal strategies for the collection price and the remanufacturing quantity were obtained by the sub-problems.