Accurate Response with Refurbished Consumer Returns

Marc Reimann*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

18 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)31-59
Number of pages29
JournalDecision Sciences
Volume47
Issue number1
Early online date14 Sep 2015
DOIs
Publication statusPublished - 1 Feb 2016
Externally publishedYes

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