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MDP Application in Fixed-Quantity Inventory Control of HRMS

We study a single item hybrid production system with remanufacturing and manufacturing (HRMS). It is assumed that remanufacturing is profitable, that on average, there are more demands than returns, and that the returns are repaired by fixedquantity. The HRMS is modelled by finite-state discrete-time Markov chains. The inventory problem under consideration is formulated by a Markov Decision Problem (MDP) model. Using the dynamic programming algorithm, we get the optimal policy. Keywords— HRMS, inventory control, fixed-quantity, Markov Decision Process, dynamic programming algorithm