Optimal order quantity and product modularity for a two-echelon returnable supply chain

Shiow Yun Chang, Tsung Yuan Yeh

Research output: Contribution to journalArticlepeer-review

16 Citations (Scopus)

Abstract

This study considers a supply chain consisting of a manufacturer, a retailer, customers and a returnable and modular product with uncertain demand, in which customers return the unsatisfactory products to the retailer, and the retailer returns the unsold products to the manufacturer. We investigate the effects of the manufacturers refund for the retailers unsold products and the product modularity under the decentralised and the centralised strategies. We confirm that the order quantity and customers return probability both affect the optimal modularity level of the product, and that the optimal modularity level is related to the refund policy. Also, a strategic alliance between the supply chain members is more advantageous to product innovation based on modularity for a returnable chain. Finally, managerial insights and remarks are offered.

Original languageEnglish
Pages (from-to)5210-5220
Number of pages11
JournalInternational Journal of Production Research
Volume51
Issue number17
DOIs
Publication statusPublished - 2013 Sep 1

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

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