The impact of sharing customer returns information in a supply chain with and without a buyback policy

In this paper, we examine a single period problem in a supply chain in which a Stackelberg manufacturer supplies a product to a retailer who faces customer returns and demand uncertainty. We show that the manufacturer incurs a significant profit loss with and without a buyback policy if it fails to account for customer returns in the wholesale price decision. Under the assumption that the retailer is better informed than the manufacturer on customer returns information, we show that without a buyback policy, the retailer prefers not to share if the manufacturer overestimates while it prefers to share customer returns information if the manufacturer underestimates this information. If the manufacturer offers a buyback policy, we have the opposite results. We also discuss incentives to share the customer returns information and some of the issues that are raised in sharing this information.

► The retailer faces customer returns in a manufacturer Stackelberg supply chain.
► Without considering customer returns, the manufacturer incurs a profit loss.
► Retailer is better informed than manufacturer on customer returns information.
► Retailer has different preferences in sharing this information with/without buyback.
► Incentives and issues to share this information are also discussed.