Liquidity implications of reverse logistics for retailers: A Markov chain approach

The reverse logistics process can generate periodic negative cash flows that are difficult to predict and account for, but are important when managing retailer liquidity. Uncertainties surrounding reverse logistics create the possibility that the retailer may be strained in meeting short-run financial obligations or opportunities. The current research offers a Markov chain approach to modeling the expectations, risks, and potential shocks associated with cash flows stemming from retail reverse logistics activities. Managerial recommendations for avoiding liquidity problems stemming from reverse logistics activities are provided.