Author
Gökbayrak, Esra, Kayış, Enis
Publication Date
2023-01
Publication Place
-
Elsevier
Subject
Inventory management, Stochastic product returns, Dynamic programming
Type
Periodical
Language
English
Digital
Yes
Manuscript
No
Library
Özyeğin University
Library Asset ID
0925-5273
Record ID
47bb98dc-1990-4b1d-9c48-b1180049d952
Library Location
Industrial Engineering
Date
2023-01
Notes
TÜBİTAK
Sample Text
Retailers have to deal with increasing levels of product returns as the shares of e-commerce sales soars. With this increase, it is no longer feasible to dispatch returned products to outlets or landfills, hence retailers must re-evaluate them both to maximize profit and to minimize their environmental impact. Our objective is to study a retailer's optimal inventory control policy under product returns to maximize expected profit which is the sales revenue minus the procurement, backorder, holding, and salvage costs incurred in a finite horizon. We model a period's returns to be stochastically dependent on the previous period's sales quantity. Using dynamic programming formulation, we solve for the optimal periodic review inventory policy and provide structural results on the optimal policy of the final period. Through numerical studies, we show that incorporating detailed sales-dependent returns could increase a retailer's expected profit by 23%. Ignoring this dependency in determining the optimal inventory policy results with increased order frequency, higher levels of backorders and more leftovers which could eventually end up in a landfill, but above all could lead to a significant overestimation of the resulting profit.
DOI
10.1016/j.ijpe.2022.108699
Cilt
255
