Inventory Control in Hybrid Systems with Remanufacturing
Management Science
Risk Behavior in Response to Quotas and Contests
Marketing Science
Supply Chain Coordination Under Channel Rebates with Sales Effort Effects
Management Science
Inventory Management of Remanufacturable Products
Management Science
Closed-Loop Supply Chain Models with Product Remanufacturing
Management Science
Time Value of Commercial Product Returns
Management Science
OR FORUM---The Evolution of Closed-Loop Supply Chain Research
Operations Research
Manufacturing & Service Operations Management
Contracting in Supply Chains: A Laboratory Investigation
Management Science
An Analysis of Coordination Mechanisms for the U.S. Cash Supply Chain
Management Science
Managing Consumer Returns in a Competitive Environment
Management Science
Manufacturing & Service Operations Management
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False failure returns are products that are returned by consumers to retailers with no functional or cosmetic defect. The cost of a false failure return includes the processing actions of testing, refurbishing (if necessary), repackaging, the loss in value during the time the product spends in the reverse supply chain (a time that can exceed several months for many firms), and the loss in revenue because the product is sold at a discounted price. This cost is significant and is incurred primarily by the manufacturer. Reducing false failure returns, however, requires effort primarily from the retailer, for example informing consumers about the exact product that best fits their needs. We address the problem of reducing false failure returns via supply chain coordination methods. Specifically, we propose a target rebate contract that pays the retailer a specific dollar amount per each unit of false failure returns below a target. This target rebate provides an incentive to the retailer to increase her effort, thus decreasing the number of false failures and (potentially) increasing net sales. We show that this contract is Pareto improving in the majority of cases. Our results also indicate that the profit improvement to both parties, and the supply chain, is substantial.