Abstract: The two-period production optimization model is developed in monopoly manufacturing/remanufacturing environment. The function between the remanufacturing cost and the remanufacturing yield is constructed on the condition of the constant return rate. The customer preference coefficient is incorporated to describe the price cannibalization and market segmentation between new and remanufactured products. The theorem that the model is a convex programming problem is verified and then KT conditions of solving are expressed. Moreover,an example of remanufacturing cost with gamma distribution is given and further the character of solving is testified. A numerical computation is given to illustrate the properties and rules of the model.

Key words: closed-loop supply chain, production optimization, cost function, market segmentation, KT conditions