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Inventory Management with product returns: the value of information

Author

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  • de Brito, M.P.
  • van der Laan, E.A.

Abstract

This paper evaluates the impact of misinformation for inventory systems with product returns. If one could exactly know how much is going to be returned and when, one would certainly benefit from incorporating this perfect information a priori in the management of production, inventory, and distribution. In practice, one has to attempt to forecast the timing and the amount of product returns, by hypothesizing about the return flow properties. To do so, historic data on demand and returns can be used. The available literature on information and inventory management with product returns commonly 1) assumes known return probabilities; or 2) considers specific cases where the most informed method does not necessarily lead to the best performance, investigating the impact on inventory related costs.

Suggested Citation

  • de Brito, M.P. & van der Laan, E.A., 2003. "Inventory Management with product returns: the value of information," ERIM Report Series Research in Management ERS-2003-060-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    • Handle: RePEc:ems:eureri:925
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    References listed on IDEAS

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    1. L. Beril Toktay & Lawrence M. Wein & Stefanos A. Zenios, 2000. "Inventory Management of Remanufacturable Products," Management Science, INFORMS, vol. 46(11), pages 1412-1426, November.
    2. Marisa P. Brito & Rommert Dekker & Simme Douwe P. Flapper, 2005. "Reverse Logistics: A Review of Case Studies," Lecture Notes in Economics and Mathematical Systems, in: Bernhard Fleischmann & Andreas Klose (ed.), Distribution Logistics, pages 243-281, Springer.
    3. Everette S. Gardner, 1990. "Evaluating Forecast Performance in an Inventory Control System," Management Science, INFORMS, vol. 36(4), pages 490-499, April.
    4. de Brito, M.P. & Dekker, R., 2003. "A Framework for Reverse Logistics," ERIM Report Series Research in Management ERS-2003-045-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    5. de Brito, M.P. & van der Laan, E.A., 2002. "Inventory control with product returns: the impact of (mis)information," Econometric Institute Research Papers EI 2002-29, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    6. Toktay, B. & van der Laan, E.A. & de Brito, M.P., 2003. "Managing Product Returns: The Role of Forecasting," ERIM Report Series Research in Management ERS-2003-023-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    7. de Brito, M.P. & Flapper, S.D.P. & Dekker, R., 2002. "Reverse logistics," Econometric Institute Research Papers EI 2002-21, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
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    Cited by:

    1. Abdelkader Sbihi & Richard Eglese, 2010. "Combinatorial optimization and Green Logistics," Annals of Operations Research, Springer, vol. 175(1), pages 159-175, March.

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    More about this item

    Keywords

    forecasting; information management; inventory management; product returns;
    All these keywords.

    JEL classification:

    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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