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Return Window Decision in A Distribution Channel

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  • Buqing Ma
  • Chenchen Di
  • Lu Hsiao

Abstract

This study investigates a firm's return window decision in a distribution channel. Conventional wisdom posits that compared to a centralized channel, a decentralized channel induces worse services (e.g., a shorter return window) because of double marginalization. We build a model consisting of one manufacturer, one retailer, and consumers who are heterogeneous in their willingness‐to‐pay (WTP) for product quality. Counterintuitively, we find that the return window can be longer in a decentralized channel than in a centralized channel. Furthermore, the return window can decrease along with product quality, which means that high‐quality products can be offered shorter return windows than low‐quality products. When endogenizing product quality, we reveal, contrary to previous findings, that the product quality in a decentralized channel may be higher, even when consumer heterogeneity in product quality follows a uniform distribution. This higher product quality induces a decentralized channel to generate a consumer surplus higher than that of a centralized channel.

Suggested Citation

  • Buqing Ma & Chenchen Di & Lu Hsiao, 2020. "Return Window Decision in A Distribution Channel," Production and Operations Management, Production and Operations Management Society, vol. 29(9), pages 2121-2137, September.
    • Handle: RePEc:bla:popmgt:v:29:y:2020:i:9:p:2121-2137
    DOI: 10.1111/poms.13201
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    References listed on IDEAS

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    Cited by:

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    3. Ramsebner, J. & Haas, R. & Auer, H. & Ajanovic, A. & Gawlik, W. & Maier, C. & Nemec-Begluk, S. & Nacht, T. & Puchegger, M., 2021. "From single to multi-energy and hybrid grids: Historic growth and future vision," Renewable and Sustainable Energy Reviews, Elsevier, vol. 151(C).
    4. Xu, Xiaoping & Hong, Zhaofu & Chen, Yujing & Cheng, T.C.E., 2023. "When is it wise to use artificial intelligence for platform operations considering consumer returns?," European Journal of Operational Research, Elsevier, vol. 308(3), pages 1188-1205.
    5. Honglin Yang & Lan Jiang & Hong Wan, 2023. "Return window decision for modular mass customization products in a two-echelon returnable supply chain," Operational Research, Springer, vol. 23(4), pages 1-36, December.
    6. Lin, Jiaxin & Choi, Tsan-Ming & Kuo, Yong-Hong, 2023. "Will providing return-freight-insurances do more good than harm to dual-channel e-commerce retailers?," European Journal of Operational Research, Elsevier, vol. 307(3), pages 1225-1239.
    7. Bingsheng Liu & Wenwen Zhu & Yinghua Shen & Yuan Chen & Tao Wang & Fengwen Chen & Maggie Wenjing Liu & Shi‐Hao Zhou, 2022. "A study about return policies in the presence of consumer social learning," Production and Operations Management, Production and Operations Management Society, vol. 31(6), pages 2571-2587, June.
    8. Guo, Xiongfei & Chen, Jing & Wu, Jie & Zhang, Tinglong & Zhang, Hui, 2024. "Returns policy, in-store service, and contract strategies in the presence of customer returns," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 186(C).
    9. Mandal, Prasenjit & Basu, Preetam & Saha, Kushal, 2021. "Forays into omnichannel: An online retailer’s strategies for managing product returns," European Journal of Operational Research, Elsevier, vol. 292(2), pages 633-651.
    10. Li, Xiaoxiao & Gao, Jie & Bian, Yiwen, 2023. "Return freight insurance strategies for the online retailer and insurance company," International Journal of Production Economics, Elsevier, vol. 256(C).
    11. Guo, Xiongfei & Chen, Jing, 2023. "Manufacturer’s quality improvement and Retailer’s In-store service in the presence of customer returns," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).
    12. Yuyang Tan & Chunxiang Guo & Dong Cai, 2023. "Value‐added service decision and coordination under fresh produce e‐commerce considering order cancelation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 2199-2210, June.
    13. Chen, Zhongwei & Fan, Zhi-Ping & Zhao, Xuan, 2021. "Offering return-freight insurance or not: Strategic analysis of an e-seller's decisions," Omega, Elsevier, vol. 103(C).
    14. Keddell, Emily & Colhoun, Sarah & Norris, Pauline & Willing, Esther, 2024. "The heuristic divergence between community reporters and child protection agencies: Negotiating risk amidst shifting sands," Children and Youth Services Review, Elsevier, vol. 159(C).

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