Time-limited return policy for innovative products

Abstract

Abstract: On the retail market for many innovative products, retailers are allowed to return unsold products to their suppliers and get a partial or full refund of the purchase price. Given the high uncertainty of the market demand for innovative products, the supplier's buyback policy is an important strategy for the retailer to reduce the market risk. Based on the theory of supply chain coordination, we develop two-stage supply chain model and study the optimal return time window for the supplier's buyback contract, in the case where market demand changes over time. We analyze the optimal decision problem for the supplier and the retailer in both centralized and decentralized scenarios. Finally, numerical analysis is conducted to demonstrate the effect of several key parameters on the optimal return time and the retailer's optimal ordering strategies.

Key words: supply chain management, buyback contract, time-limited return policy

CLC Number:

Zhu Jing, Fu Xiaorong, Xie Qinghong. Time-limited return policy for innovative products[J]. Science Research Management, 2015, 36(2): 60-68.

References

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