Research On Return Policy And Supply Chain Coordination With Consumer Behavior Consideration

With the development of scientific and production technology, the productcategories and functions diversify dramatically. While influenced by the consumptionconcept of “consumer is god”, consumer return becomes commonly seen. Further, thefierce market competition and sales mode also exacerbate this consumer returnproblem, the enterprise has to strengthen the management on consumer returnproblem. Based on the above backdrop, by adopting theories and methods ofOperations Research, Game Theory, Marketing Science and Inventory Theories, thisthesis studies a two-echelon supply chain with one single manufacturer and one singleretailer, and investigates how the retailer develop different selling and return policiesto reduce the consumer’s false failure returns (including general false failure returns,opportunistic returns and network external return). Finally, this thesis studies theretailer’s choice on the normal and advance selling mode with risk-neutral andrisk-averse preference, and which kind of buy-back contract the manufacturer canadopt to coordinate the supply chain with different risk preference, return behaviorand sales mode consideration.More specifically, we study the main problem in three aspects as follows:1. Return policy and buy-back contract coordination in the single selling modecase (only normal selling mode)First, we study the retailer’s optimal return deadline policy and the buy-backcontract coordination when the consumer valuation depends on the return deadline. Itis found that the retailer’s optimal return deadline depends on the product life-cycleand the consumer return rate, and the retailer’s optimal refund policy depends on thereturn deadline. In this setting, we find that the traditional buy-back contract fails tocoordinate the supply chain, and when the product salvage value is related to thereturn deadline, the differentiated buy-back contract also fails, so we put forward adifferentiated buy-back contract contingent on the return deadline to coordinate thesupply chain.Second, we consider a network external (NE) return problem, where the consumer valuation depends on the return phenomenon and return amount observed.In this setting, we explore the retailer’s optimal refund policy and the coordinationefficiency of the buy-back contract. It is found that the optimal refund is thedifference between the salvage value and the NE effect in the fixed NE case. And theoptimal refund depends on the salvage value, consumer valuation and NE effect in thenetwork external contingent on return amount case. With the NE return, thetraditional buy-back contract can’t coordinate the supply chain any more, and then weput forward a differentiated buy-back contract, with different refund to the unsoldproduct and consumer returns, to coordinate the supply chain.2. Return policy and buy-back contract coordination in the multiple selling modescase (integrated mode of advance selling and normal selling)First, we consider a multiple selling mode with advance selling and normalselling, and study the retailer’s three selling strategies: no advance selling, advanceselling with partial refund and advance selling with full refund. It is found that bothno advance selling and advance selling with full refund strategies are not optimalselling strategy. And the effect of advance selling depends on the correlation of thedemands in the normal selling period and advance selling period. Furthermore, theadvance selling strategy does not affect the coordination efficiency of the buy-backcontract essentially; the manufacturer still offers the buy-back contract to coordinatethe supply chain with multiple selling modes.Second, we investigate the consumer’s opportunistic behavior in the multipleselling modes case. We also consider the retailer’s three selling strategies. It is foundthat the retailer’s optimal choice of the selling strategy depends on the characters ofboth consumer and market demand, such as consumer valuation, consumerclassification, and demand variance etc. And the partial refund policy can reduce theretailer’s risk by offering a lower refund, especially the partial refund policy withskimming pricing can eliminate the opportunistic return completely, however, thispricing policy also drops the retailer’s selling revenue.3. Return policy and buy-back contract coordination with loss-averse retailerWe consider the return policy and buy-back contract coordination problem withone type of loss-averse retailer, where the loss-averse retailer adopts a Mean-Variance decision method to determine his optimal decisions. It is found that the retailer’spolicy to reduce his risk depends on the marginal profit of both decisions: reducingordering quantity and refund. Besides, the retailer’s optimal strategy on the sellingmode depends on his maximal risk tolerance, demand and marginal profit of hisdecisions. And the risk tolerance affects the coordination efficiency of the buy-backcontract to a large extent, especially when the maximal risk tolerance is low, thebuy-back contract will harm the interest of the manufacturer, and fail to coordinatethe supply chain.