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Optimal collection policies for returned products in the reverse supply chain

Author

Listed:
  • Moulik Kapadia
  • Emanuel Melachrinoudis
  • Nizar Zaarour

Abstract

The emergence of e-commerce and increasing customer service expectations have pushed a growing number of firms to adopt liberal return policies, this results however in skyrocketing return delivery costs. To reduce this impact of product returns on a firm's baseline, we develop and compare different collection models by leveraging economies of scale and optimising the collection period across multiple initial collection points (ICPs) in a three-echelon network before transshipping the returned products to a centralised return centre (CRC). Collection policies are developed for the case of multiple ICPs and a single type of product: 1) individual shipment policy; 2) combined shipment policy; 3) hybrid shipment policy. Mathematical models are developed for calculating the combined inventory and transportation costs for these policies, and an optimisation approach is designed to minimise the number of computations required to reach the optimal collection period. The results are then presented with an experimental dataset.

Suggested Citation

  • Moulik Kapadia & Emanuel Melachrinoudis & Nizar Zaarour, 2022. "Optimal collection policies for returned products in the reverse supply chain," International Journal of Logistics Systems and Management, Inderscience Enterprises Ltd, vol. 42(2), pages 240-272.
    • Handle: RePEc:ids:ijlsma:v:42:y:2022:i:2:p:240-272
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