#4557. Information strategy in a supply chain under asymmetric customer returns information

July 2026publication date
Proposal available till 19-05-2025
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Journal’s subject area:
Civil and Structural Engineering;
Business and International Management;
Transportation;
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Abstract:
We develop a model for a supply chain with a manufacturer and a retailer facing customer returns, in which information about the rate of customer returns is obtained and held asymmetrically. The manufacturer is uninformed about the returns rate. The manufacturer has four strategies as to returns rate information: not acquiring the information, acquiring the information through a side payment contract, offering a buyback policy in order to participate in the returns process, or encroaching with a direct channel. We find that a buyback policy helps the manufacturer to obtain returns rate information for free when the salvage value is the same for the manufacturer and the retailer. The retailer may benefit from the cases in which the manufacturer does not acquire the information, adopts a side payment contract, or institutes a buyback policy, but the retailer is always worse off from the manufacturers channel encroachment strategy. Both the manufacturer and the retailer may have consistent preferences as to the manufacturers strategy.
Keywords:
Asymmetric information; Buyback; Channel encroachment; Customer returns; Information strategy; Supply chain management

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