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Analysis and design of returns policies from a supplier's perspective.

Wang, H, Wang, W and Kobbacy, KAH 2006, 'Analysis and design of returns policies from a supplier's perspective.' , Journal of the Operational Research Society, 58 (3) , pp. 391-401.

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Abstract

This paper considers the problem of designing a returns policy in a supply chain from a supplier's perspective. The supply chain considered here is assumed to have one supplier and one retailer who serves a random demand of a product with a short life cycle. The retailer can return all the unsold products to the supplier with a partial refund. We found that if the retailer behaviour is rational, that is, ordering the optimal quantity to maximize its expected profit, then both retailer and supplier could benefit from the returns policy. Furthermore, we established that the optimal buyback price is independent of the mean of the random demand, but the variance of the demand has a significant impact on setting the optimal buyback price. The higher the variance the higher the optimal buyback price and the larger the profit gain of both parties. Numerical studies are employed to help understand the benefits of returns policies for the supplier, the retailer, and the whole supply chain.

Item Type: Article
Themes: Subjects / Themes > H Social Sciences > HD Industries. Land use. Labor > HD0028 - 0070 Management. Industrial Management
Subjects outside of the University Themes
Schools: Colleges and Schools > College of Business & Law > Salford Business School > Operations and Global Logistics Management
Journal or Publication Title: Journal of the Operational Research Society
Publisher: Palgrave Macmillan
Refereed: Yes
ISSN: 0160-5682
Depositing User: H Kenna
Date Deposited: 21 Aug 2007 14:57
Last Modified: 20 Aug 2013 16:46
URI: http://usir.salford.ac.uk/id/eprint/275

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