Inventory Management in Closed Loop Supply Chains: a heuristic approach with safety stock on demand

Inventory management is one of the most important aspect in Closed Loop Supply Chain. This paper introduces a strategy for managing the return flow in order to increase service level in a stochastic scenario. We analyse a single-product hybrid system where inventory level is under continuous review and remanufacturing is used as a recovery option to protect from stockout. The aim is to exploit the opportunity of relocating safety stocks from a serviceable inventory to a remanufacturable inventory, in order to reduce stockholding costs.