In this study we investigate possible benefits of remanufacturing in inventory-related costs. In order to examine the conditions on different system parameters that make the remanufacturing option cost attractive, the return ratio is considered as a decision variable. The production environment, where the manufacturing and remanufacturing require both common and separate operations, together with the supplier's operations for the new parts and useful lifetime of the product is modeled as a queuing network. A cost model is constructed under certain environmental assumptions. In this paper, the analysis of the model and computational study carried out are discussed. (C) 2002 Elsevier Science B.V. All rights reserved.