Research Of Two Ordering Opportunities Policy And Contract Based On Consumer's Return

With the enhancement of consumers' requirement, the treatment of consumers'return becomes one of the factors that influence consumers'trust and loyalty to sellers,which also effects on manufacturing and retailer's ordering. So how to deal with returngoods becomes a new way of increasing efficiency of supply chain. Product informationpasses on faster as the way information spreads improving, which makes demandunstable. Traditional ordering model bases on invariable demand. It is necessary tostudy the two ordering opportunities policy with consumer's return.In this paper, we propose that return goods are handled by both manufacturer andretailer and especially point out that defective products are renovated by manufacturer.Models are established to investigate retailer, manufacturer and supply chain's expectedprofit under one ordering opportunity policy with consumer's return and the existence ofoptimal ordering policy is proved. Some analysis and discussion are processed onexpected profit models according to a case.On the basis of two ordering opportunities models available, we propose that falsefailure returns are sold again by retailer and defective product are handled bymanufacturer. By analyzing the influence of return goods to retailer and manufacturer,retailer, manufacturer and supply chain's expected profit models are developed undertwo ordering opportunities policy. Case study proves the optimal decision of the retailerunder two ordering opportunities policy is better than that under one orderingopportunity policy.Some discussions are processed on enforcement of the ordering policy via contract.An ordering contract is proposed in order to maximize manufacturer's excepted profitand encourage manufacturer to accept retailer's ordering policy. Considering theretailer's risk caused by return goods, we propose a combined contract based onmarkdown allowance contract. The analysis of models indicates that the combinedcontract can effectively coordinate the supply chain system.