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Coordinating a three level supply chain with flexible return policies

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  • Ding, Ding
  • Chen, Jian

Abstract

This paper studies the coordination issue of a three level supply chain selling short life cycle products in a single period model. The manufacturer first negotiates the trade contract with the retailer, then with the supplier. We construct the so-called flexible return policy by setting the rules of pricing while postponing the determination of the final contract prices. With return policies between each pair of adjacent firms, unsold products or used modules dissembled from the unsold products are returned level by level from the retailer to the upstream firms and each firm shares in the loss due to the overstock. We show that the three level supply chain can be fully coordinated with appropriate contracts and the total profit of the channel can be allocated with any specified ratios among the firms.

Suggested Citation

  • Ding, Ding & Chen, Jian, 2008. "Coordinating a three level supply chain with flexible return policies," Omega, Elsevier, vol. 36(5), pages 865-876, October.
  • Handle: RePEc:eee:jomega:v:36:y:2008:i:5:p:865-876
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    References listed on IDEAS

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    Cited by:

    1. Panda, S. & Modak, N.M. & Basu, M. & Goyal, S.K., 2015. "Channel coordination and profit distribution in a social responsible three-layer supply chain," International Journal of Production Economics, Elsevier, vol. 168(C), pages 224-233.
    2. Liu, Jian & Mantin, Benny & Wang, Haiyan, 2014. "Supply chain coordination with customer returns and refund-dependent demand," International Journal of Production Economics, Elsevier, vol. 148(C), pages 81-89.
    3. Feng, Xuehao & Moon, Ilkyeong & Ryu, Kwangyeol, 2014. "Revenue-sharing contracts in an N-stage supply chain with reliability considerations," International Journal of Production Economics, Elsevier, vol. 147(PA), pages 20-29.
    4. Wang, John & Yan, Ruiliang & Hollister, Kimberly & Zhu, Dan, 2008. "A historic review of management science research in China," Omega, Elsevier, vol. 36(6), pages 919-932, December.
    5. Hsueh, Che-Fu, 2014. "Improving corporate social responsibility in a supply chain through a new revenue sharing contract," International Journal of Production Economics, Elsevier, vol. 151(C), pages 214-222.
    6. repec:eee:joreco:v:21:y:2014:i:3:p:249-257 is not listed on IDEAS
    7. Hu, Fei & Lim, Cheng-Chew & Lu, Zudi, 2013. "Coordination of supply chains with a flexible ordering policy under yield and demand uncertainty," International Journal of Production Economics, Elsevier, vol. 146(2), pages 686-693.
    8. Lin, Danping & Lee, Carman Ka Man & Yang, Jilin, 2017. "Air cargo revenue management under buy-back policy," Journal of Air Transport Management, Elsevier, vol. 61(C), pages 53-63.
    9. Huang, Ximin & Gu, Jia-Wen & Ching, Wai-Ki & Siu, Tak-Kuen, 2014. "Impact of secondary market on consumer return policies and supply chain coordination," Omega, Elsevier, vol. 45(C), pages 57-70.
    10. Holsapple, Clyde W. & Lee-Post, Anita, 2010. "Behavior-based analysis of knowledge dissemination channels in operations management," Omega, Elsevier, vol. 38(3-4), pages 167-178, June.
    11. Lai, Guoming & Debo, Laurens G. & Sycara, Katia, 2009. "Sharing inventory risk in supply chain: The implication of financial constraint," Omega, Elsevier, vol. 37(4), pages 811-825, August.
    12. Hasuike, Takashi & Ishii, Hiroaki, 2009. "On flexible product-mix decision problems under randomness and fuzziness," Omega, Elsevier, vol. 37(4), pages 770-787, August.
    13. Palsule-Desai, Omkar D., 2013. "Supply chain coordination using revenue-dependent revenue sharing contracts," Omega, Elsevier, vol. 41(4), pages 780-796.
    14. Pan, Kewen & Lai, K.K. & Liang, L. & Leung, Stephen C.H., 2009. "Two-period pricing and ordering policy for the dominant retailer in a two-echelon supply chain with demand uncertainty," Omega, Elsevier, vol. 37(4), pages 919-929, August.
    15. Arshinder & Kanda, Arun & Deshmukh, S.G., 2008. "Supply chain coordination: Perspectives, empirical studies and research directions," International Journal of Production Economics, Elsevier, vol. 115(2), pages 316-335, October.
    16. Chen, Jing & Zhang, Hui & Sun, Ying, 2012. "Implementing coordination contracts in a manufacturer Stackelberg dual-channel supply chain," Omega, Elsevier, vol. 40(5), pages 571-583.
    17. Keren, Baruch, 2009. "The single-period inventory problem: Extension to random yield from the perspective of the supply chain," Omega, Elsevier, vol. 37(4), pages 801-810, August.
    18. repec:eee:apmaco:v:256:y:2015:i:c:p:913-929 is not listed on IDEAS
    19. Liang, Wen Yau & Huang, Chun-Che & Lin, Yin-Chen & Chang, Tsun Hsien & Shih, Meng Hao, 2013. "The multi-objective label correcting algorithm for supply chain modeling," International Journal of Production Economics, Elsevier, vol. 142(1), pages 172-178.
    20. repec:eee:proeco:v:193:y:2017:i:c:p:663-676 is not listed on IDEAS
    21. Huang, Di & Zhou, Hong & Zhao, Qiu-Hong, 2011. "A competitive multiple-product newsboy problem with partial product substitution," Omega, Elsevier, vol. 39(3), pages 302-312, June.
    22. Hua, Zhongsheng & Zhang, Xuemei & Xu, Xiaoyan, 2011. "Product design strategies in a manufacturer-retailer distribution channel," Omega, Elsevier, vol. 39(1), pages 23-32, January.
    23. Cai, Xiaoqiang & Chen, Jian & Xiao, Yongbo & Xu, Xiaolin & Yu, Gang, 2013. "Fresh-product supply chain management with logistics outsourcing," Omega, Elsevier, vol. 41(4), pages 752-765.
    24. Liu, Guowei & Zhang, Jianxiong & Tang, Wansheng, 2015. "Strategic transfer pricing in a marketing–operations interface with quality level and advertising dependent goodwill," Omega, Elsevier, vol. 56(C), pages 1-15.
    25. Modak, Nikunja Mohan & Panda, Shibaji & Sana, Shib Sankar, 2016. "Three-echelon supply chain coordination considering duopolistic retailers with perfect quality products," International Journal of Production Economics, Elsevier, vol. 182(C), pages 564-578.

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