Inventory control for returnable transport items in a closed-loop supply chain

•Model inventory at each stage in a supply chain for returnable transport items.•Optimal values for inspection run length and time between container purchases.•Safety stock of used and repairable containers to buffer uncertain returns.•Case study presenting use of methodology to manage returnable transport items.

An inventory control model for returnable transport items (RTI) where the manager selects the optimal length for inspection, repair, and purchase cycles is described. Repaired and newly obtained RTI are used in combination to satisfy current production requirements. Uncertain returns are incorporated into the model by determining a satisfactory safety stock level to buffer the inventory of used and repairable containers. The minimum cost solution is obtained when inspection and repair runs begin simultaneously. Cycle times are a function of the expected return rate and repairable percentage, while variability in these random assumptions affects the required safety stock.