Beneficial Product Returns in Supply Chains

Forthcoming at Production and Operations Management

14 Pages Posted: 23 May 2021 Last revised: 4 Oct 2021

See all articles by Meng Li

Meng Li

University of Houston - Department of Decision & Information Sciences

Yunchuan Liu

University of Illinois at Urbana-Champaign

Date Written: May 19, 2021

Abstract

Many retailers and manufacturers accept product returns from consumers (via money-back guarantees) and retailers (via full-credit return policies) respectively. While the extant literature focuses on either manufacturer or retailer return policies, this paper investigates both return policies and finds that a manufacturer's return policy can induce the retailer to adopt a return policy. Although accepting consumer returns hurts the manufacturer when the manufacturer sells through non-competing retailers, we find that the manufacturer is not destined to be hurt by accepting returns when selling to competing retailers that are differentiated in their returns rates.

Suggested Citation

Li, Meng and Liu, Yunchuan, Beneficial Product Returns in Supply Chains (May 19, 2021). Forthcoming at Production and Operations Management, Available at SSRN: https://ssrn.com/abstract=3849608

Meng Li (Contact Author)

University of Houston - Department of Decision & Information Sciences ( email )

United States

Yunchuan Liu

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

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