Manufacturer's contract choice and retailer's returns management strategy

Dan Li, Jing Chen, Bintong Chen, Yi Liao

Producción científica: Contribución a una revistaArtículorevisión exhaustiva

8 Citas (Scopus)

Resumen

Managing customer returns is a supply chain issue; manufacturers typically manage them through buyback contracts, while retailers can attempt to recover a product's salvage value, or sell it as an open-box item. This paper investigates returns management strategies by developing a game theoretical model for a supply chain with a manufacturer (Stackelberg leader) and a retailer (the follower) facing customer returns. The manufacturer chooses either a buyback or a wholesale-price contract. Under a wholesale-price contract, the retailer either salvages or resells returned products. We identify the optimal returns management strategy. We show that each of the three strategies may achieve Pareto improvement for both supply chain members, and for the customers and society. The retailer's choice to resell or not depends on its inspection cost, or the system efficiency of the supply chain in reselling a returned product relative to that in selling a new product. The manufacturer's choice of contract depends on whether it can salvage a returned product more efficiently than the retailer, and on the retailer's unit inspection cost of the returned product. We capture a few identifiable quantities and thresholds that help the manufacturer and the retailer to simplify decision making.

Idioma originalEnglish
Número de artículo102862
PublicaciónTransportation Research, Part E: Logistics and Transportation Review
Volumen165
DOI
EstadoPublished - sep. 2022

Nota bibliográfica

Funding Information:
This research is supported by the Natural Sciences and Engineering Research Council of Canada, the National Natural Science Foundation of China (No. 71871186 and No. 71871184), the Fundamental Research Funds for the Central Universities (JBK190504), and Guanghua Talent Project of Southwestern University of Finance and Economics.

Publisher Copyright:
© 2022 Elsevier Ltd

ASJC Scopus Subject Areas

  • Business and International Management
  • Civil and Structural Engineering
  • Transportation

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