Reverse logistics in e‐business: Optimal price and return policy
International Journal of Physical Distribution & Logistics Management
ISSN: 0960-0035
Article publication date: 1 January 2004
Abstract
In an Internet direct sales supply chain, the customers buy direct from the manufacturer sacrificing the benefit of physical inspection of the product. This increases the likelihood that customers will have some dissatisfaction with the product and would like to return it. A clearly explained and generous return policy, then, will be welcome by the customers and therefore will enhance demand. From the manufacturer's point of view, this will increase revenue, but will also increase cost due to increased likelihood of return. This paper develops a profit‐maximization model to obtain optimal policies for price and the return policy in terms of certain market reaction parameters. It obtains jointly a number of managerial guidelines for using marketing and operational strategy variables to influence the reaction parameters so as to obtain the maximum benefit from the market. The paper mentions several future research possibilities.
Keywords
Citation
Mukhopadhyay, S.K. and Setoputro, R. (2004), "Reverse logistics in e‐business: Optimal price and return policy", International Journal of Physical Distribution & Logistics Management, Vol. 34 No. 1, pp. 70-89. https://doi.org/10.1108/09600030410515691
Publisher
:Emerald Group Publishing Limited
Copyright © 2004, Emerald Group Publishing Limited