Abstract: The paper analyzed the production cost and logistics cost of the engine remanufacturing, and established the key factors and cost analysis model of the engine remanufacturing. We analyzed the cost of remanufacturing based on different production lot, different inventory strategies and different management. Finally, the Vensim software is used to simulation study. We draw the conclusion: With the expansion of production, the existing recovery network should be expanded in order to reduce the recovery cost. Due to the impact of shortages is very obvious, making-to-order production model should be taken to reduce the shortage cost.