The inventory system of repairable items is a managerial tool used to integrate all information concerning on-hand inventories and movements for new and repaired items. The paper describes developing a simulation model for managing the inventory of repairable items for a manufacturing system where faulty items are sent to a repair shop with uncertain failure rates, lead times, and repair times. The proposed model imitates processing and controlling the on-hand inventory of repaired items and replenishing the inventory of new items using the minimum/maximum ordering policy in a flexible and risk-free environment. We exhibit the appropriateness and effectiveness of the suggested simulation model using a demonstrative case problem. The developed model can be relied on as a tool for estimating healthy on-hand inventories of new and repaired items, downtime, and back-ordered items due to the unavailability of repaired items.