Recently, there has been a growing interest in reverse logistics due to environmental deterioration. Firms incorporate reverse flow to their systems for such reasons as ecological and economic factors, government regulations and social responsibilities. In this paper a new mixed integer mathematical model for a remanufacturing system, which includes both forward and reverse flows, is proposed and illustrated on a numerical example. The proposed model provides the optimal values of production and transportation quantities of manufactured and remanufactured products while solving the location problem of dissassembly, collection and distribution facilities. The model is validated by using a set of experimental data reflecting practical business situation. Sensitivity analysis of the model is also presented.