In this paper, a periodic-review dynamic production inventory system for a single reusable product is investigated. There are two
stocks, one for the serviceable items and one for the remanufactured ones. We assume that the items in either stock may be subject
to deterioration. Items deterioration is of great importance to inventory theory. An optimal control is derived in the case where
the deterioration parameters are known and a self-tuning optimal control strategy is applied in the case where the deterioration
parameters are unknown. In particular, the recursive least-squares (RLS) method is used to identify the deterioration parameters.
Simulations are conducted to illustrate the results obtained.