In such a system the end-product stock contains both manufactured and remanufactured products, while the remanufacturable stock may contain products of different quality. Due to its complex structure, the valuation of inventories at the various stocking points is ambiguous. For two cases regarding quality differentiation we determine holding cost rates such that the outcomes of a net present value approach and an average cost approach are approximately equivalent. We show how the correct holding cost rates deviate from traditional valuation methodology and demonstrate its impact on operational performance. These academic papers are available to purchase through Sciencedirect.com, usually at US$30 each. To do this, it is necessary to register via the weblink given.

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