Accurate Response with Refurbished Consumer Returns1. (14th September 2015)

• Record Type: Journal Article
• Authors: Reimann, Marc
• Is Part Of: Decision sciences. Volume 47:Number 1(2016:Feb.)
• Page Start: 31
• Page End: 59
• Publication Date: 2015-09-14
• Subjects: Accurate Response -- Consumer Returns -- Refurbishing -- Closed‐loop Supply Chain; Decision making -- Periodicals; Policy sciences -- Periodicals; 658.40305
• DOI: 10.1111/deci.12150
• Languages: English
• ISSNs: 0011-7315

Abstract

ABSTRACT: Centering around anticipative and reactive capabilities of firms, accurate response is an important supply‐side strategy to deal with demand uncertainty. Clearly, the structure of the possible reaction will crucially influence the optimal anticipative decision making. In this article, we extend the existing literature in this area by including a new reactive capability, namely the utilization of refurbished consumer returns from early sales to react to demand later in the selling season. Because consumer returns depend on previous sales, there is also a direct link to the anticipative supply decision. We capture this effect in a newsvendor‐type model and provide both analytical and numerical insights into the optimal anticipative and reactive decisions as well as the value of refurbishing in terms of the retailer's expected profitability.