Quality disclosure strategy in a decentralized supply chain with consumer returns

The University of Auckland Business School Research Paper Series

International Transactions in Operational Research, 27(4), 2139-2156. DOI: 10.1111/itor.12723.

Posted: 5 Apr 2024

See all articles by Tiaojun Xiao

Tiaojun Xiao

Nanjing University

Yunlong Chen

Nanjing University - State Key Laboratory of Analytical Chemistry for Life Science

David Robb

University of Auckland

Zhangwei Feng

Nanjing University

Date Written: 2019

Abstract

We study the quality disclosure strategy of a manufacturer/retailer in a supply chain with consumer returns for new products. In particular, we explicitly model the effect of quality disclosure on the reduction of the returns rate. We identify the condition in which the manufacturer/retailer should reveal product quality in the presence of consumer returns. We find that (1) the manufacturer/retailer has an incentive to choose quality disclosure strategy when the disclosure quality is above a lower bound; (2) if the returns rate of new products is low, the retailer-disclosure scenario leads to reveal more quality information than that of the manufacturer-disclosure scenario; otherwise, the manufacturer-disclosure scenario leads to reveal more quality information; and (3) the manufacturer prefers to reveal a higher level of product quality in the supply chain with a higher refund amount or a lower salvage value per unit of returned product. Full paper available at https://doi-org/10.1111/itor.12723

Keywords: supply chain management, consumer returns for new products, quality disclosure, returns policy, game theory

Suggested Citation

Xiao, Tiaojun and Chen, Yunlong and Robb, David and Feng, Zhangwei, Quality disclosure strategy in a decentralized supply chain with consumer returns ( 2019). The University of Auckland Business School Research Paper Series, International Transactions in Operational Research, 27(4), 2139-2156. DOI: 10.1111/itor.12723., Available at SSRN: https://ssrn.com/abstract=4785124

Tiaojun Xiao

Nanjing University ( email )

Nanjing, Jiangsu 210093
China

Yunlong Chen

Nanjing University - State Key Laboratory of Analytical Chemistry for Life Science

Nanjing
China

David Robb (Contact Author)

University of Auckland ( email )

Dept of Information Systems and Operations Manage
Private Bag 92019
Auckland, 1142
New Zealand
+64-9-923-2812 (Phone)

HOME PAGE: http://www.business.auckland.ac.nz/people/d-robb

Zhangwei Feng

Nanjing University ( email )

Nanjing, 210093
China

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