Title: An optimal pricing and quality assessment model for consumer returns in a multi-period closed-loop supply chain

Authors: Kamil Ciftci; Yertai Tanai; George R. Wilson

Addresses: Department of Information Systems and Decision Sciences, Craig School of Business, California State University, Fresno, CA 93740, USA ' Department of Information Systems and Decision Sciences, Craig School of Business, California State University, Fresno, CA 93740, USA ' Department of Industrial and Systems Engineering, P.C. Rossin College of Engineering and Applied Science, Lehigh University, Bethlehem, PA 18015, USA

Abstract: We propose a framework for a single demand and its returns occurring in a multi-period setting. The goal of this study is to determine price and processing quantities of returns for a retailer when she is faced with stochastic returns and numerous quality conditions for returns specific to a particular period. We formulate the expected profit function of a single demand and its returns over the sales periods and analytically derive the optimum price expression. Furthermore, we develop an extensive numerical experiment to analyse the effect of key parameters on the profit and price. The research herein shows that an increasing number of quality categories for returns improves the total profit significantly over the sales periods. Likewise, we find that the number of quality categories for returns can also affect changes in the price indicating the importance of sensitivity of the retail price to the returns quality.

Keywords: closed-loop supply chain; returns quality; consumer returns management; multi-period planning; pricing decisions.

DOI: 10.1504/IJOR.2023.132254

International Journal of Operational Research, 2023 Vol.47 No.3, pp.273 - 296

Received: 18 Aug 2020
Accepted: 20 Nov 2020
Published online: 14 Jul 2023 *

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