This paper deals with a joint EOQ and EPQ model in which a stationary demand is satisfied by recovered products as well as newly purchased products. It is assumed that a fixed proportion of the used products are collected from customers and later recovered for reuse. We generalize the (P,R) policy in the literature by treating the sequence of orders for newly purchasing products and setups for recovery process within a cycle as a decision variable. Through example problems we illustrate the validity of the model and solution procedure developed. (C) 2006 Elsevier B.V. All rights reserved.