Coordinating a decentralized supply chain with customer returns and price-dependent stochastic demand using a buyback policy |
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| Authors: | Jing Chen Peter C Bell |
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| Institution: | a Faculty of Business and Economics, University of Winnipeg, 515 Portage Avenue, Winnipeg, Canada R3B 2E9
b Richard Ivey School of Business, University of Western Ontario, 1151 Richmond Street North, London, Canada N6A 3K7 |
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| Abstract: | We investigate a decentralized supply chain that consists of a manufacturer and a retailer where the retailer simultaneously determines the retail price and order quantity while experiencing customer returns and price dependent stochastic demand. We propose an agreement between the manufacturer and the retailer that includes two buyback prices, one for unsold inventory and a second for customer returns, and show that this type of easy-to-implement agreement can achieve perfect supply chain coordination and be a win-win for both manufacturer and retailer when a complementary profit-sharing agreement is included. |
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| Keywords: | Supply chain management Coordination mechanism Buyback policies Pricing Inventory policies |
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