Integrated inventory model of returns-quantity discounts contract

Shi C-S and Su C-T ()
Additional contact information
Shi C-S: National Chiao Tung University
Su C-T: National Chiao Tung University

Journal of the Operational Research Society, 2004, vol. 55, issue 3, 240-246

Abstract: Abstract In the traditional inventory problem, to secure demand risk a retailer often requests the right to return unsold goods, although this is associated with higher wholesale prices. Various studies have attempted to illustrate the returns scenario. However, these studies have focused on optimization from the retailer's perspective only, and have thus ignored the fact that the manufacturer might have no incentive to accept returns. This study takes account of the self-interest of both the retailer and the manufacturer, and demonstrates that a quantity discount scheme should provide the manufacturer with incentive to accept returns. A three-stage theoretical model is developed and presented to illustrate the returns-quantity discounts contract, and demonstrates that the contract is self-enforcing. Furthermore, it is demonstrated that Pareto efficiency can be attained in the model. The scenarios are illustrated through a numerical example.

Keywords: returns policy; quantity discounts; channel cooperation; Pareto efficiency (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://link.springer.com/10.1057/palgrave.jors.2601676 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jorsoc:v:55:y:2004:i:3:d:10.1057_palgrave.jors.2601676

Ordering information: This journal article can be ordered from
http://www.springer. ... search/journal/41274

DOI: 10.1057/palgrave.jors.2601676

Access Statistics for this article

Journal of the Operational Research Society is currently edited by Tom Archibald and Jonathan Crook

More articles in Journal of the Operational Research Society from Palgrave Macmillan, The OR Society
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().