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Optimal pricing and order policies with B2B product returns for fashion products

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  • Li, Yongjian
  • Wei, Cansheng
  • Cai, Xiaoqiang

Abstract

We study optimal pricing and order policies in supply chain management of fashion products (e.g., a fashion apparel category) with consideration of product returns between supply chain partners (B2B). In order to study channel performance and optimal policies, two stochastic models for centralized channel and decentralized channel are, respectively, developed to handle new fashion and off-season product sales. In the centralized channel, closed-form solutions for optimal order and pricing decisions are proposed for new fashion products. Further, in a decentralized channel, the Stackelberg game model is proposed to derive the optimal Stackelberg equilibrium solution, and then a buy-back contract is designed to coordinate the channel. We also perform parameter analysis on performance of the two channel models. Numerical analysis is finally presented to validate our theoretical results and compare channel performances.

Suggested Citation

  • Li, Yongjian & Wei, Cansheng & Cai, Xiaoqiang, 2012. "Optimal pricing and order policies with B2B product returns for fashion products," International Journal of Production Economics, Elsevier, vol. 135(2), pages 637-646.
    • Handle: RePEc:eee:proeco:v:135:y:2012:i:2:p:637-646
    DOI: 10.1016/j.ijpe.2011.05.004
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    Cited by:

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    2. Azad Gholami, Reza & Sandal, Leif K. & Ubøe, Jan, 2019. "Solution Algorithms for Optimal Buy-Back Contracts in Multi-period Channel Equilibria with Stochastic Demand and Delayed Information," Discussion Papers 2019/10, Norwegian School of Economics, Department of Business and Management Science.
    3. Tsan-Ming Choi, 2016. "Multi-period risk minimization purchasing models for fashion products with interest rate, budget, and profit target considerations," Annals of Operations Research, Springer, vol. 237(1), pages 77-98, February.
    4. Wen, Xin & Choi, Tsan-Ming & Chung, Sai-Ho, 2019. "Fashion retail supply chain management: A review of operational models," International Journal of Production Economics, Elsevier, vol. 207(C), pages 34-55.
    5. Zhi-Hua Hu & Qing Li & Xian-Juan Chen & Yan-Feng Wang, 2014. "Sustainable Rent-Based Closed-Loop Supply Chain for Fashion Products," Sustainability, MDPI, vol. 6(10), pages 1-26, October.
    6. Zhou, Erfeng & Zhang, Juzhi & Gou, Qinglong & Liang, Liang, 2015. "A two period pricing model for new fashion style launching strategy," International Journal of Production Economics, Elsevier, vol. 160(C), pages 144-156.
    7. Chen, Pingping & Zhao, Ruiqing & Yan, Yingchen & Li, Xiang, 2020. "Promotional pricing and online business model choice in the presence of retail competition," Omega, Elsevier, vol. 94(C).
    8. Tsan-Ming Choi, 2016. "Multi-period risk minimization purchasing models for fashion products with interest rate, budget, and profit target considerations," Annals of Operations Research, Springer, vol. 237(1), pages 77-98, February.
    9. Chen, Hao-Wei, 2023. "Improving supply quality through the store-initiated returns in wholesale supply chains," International Journal of Production Economics, Elsevier, vol. 261(C).
    10. Wang, Chong & Chen, Jing & Chen, Xu, 2017. "Pricing and order decisions with option contracts in the presence of customer returns," International Journal of Production Economics, Elsevier, vol. 193(C), pages 422-436.
    11. Ülkü, M. Ali & Gürler, Ülkü, 2018. "The impact of abusing return policies: A newsvendor model with opportunistic consumers," International Journal of Production Economics, Elsevier, vol. 203(C), pages 124-133.
    12. Fezzeh Abanavaz & Morteza Khakzar Bafruei, 2020. "Investigating the Return of Goods in Supply Chain," International Review of Management and Marketing, Econjournals, vol. 10(4), pages 170-176.
    13. Shu-Hao Li & Qiang Sun, 2022. "Stackelberg Game Analysis of E-Waste Recycling Stakeholders under Recovery Time Sensitivity and CRMs Life Expectancy Sensitivity," Sustainability, MDPI, vol. 14(15), pages 1-29, July.
    14. Zhang, Linghong & Wang, Jingguo, 2017. "Coordination of the traditional and the online channels for a short-life-cycle product," European Journal of Operational Research, Elsevier, vol. 258(2), pages 639-651.
    15. Hu, Benyong & Qu, Jiali & Meng, Chao, 2018. "Supply chain coordination under option contracts with joint pricing under price-dependent demand," International Journal of Production Economics, Elsevier, vol. 205(C), pages 74-86.

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