Return policy and contract design under asymmetric return rate information
Jun Yang1, Taotao Li1 , Lulu Shao
COMPUTER MODELLING & NEW TECHNOLOGIES 2014 18(12C) 1158-1163
1 School of Management, Huazhong University of Science and Technology, Wuhan 430074, China
In this paper, we mainly discuss how a manufacturer should provide return service with different market-return rates when offers a partial refund. We consider a supply chain model that a dominant manufacturer supplying a single product to a retailer under the revenue sharing contract, in a single-period. The market demand is assumed to be dependent on the return price offering by manufacturer. We first analyse the model with the full information about market-return rate, which shows that manufacturer can determine the optimal return price according to the consumer’s sensitivity of return price and the market-return rate. However, when the retailer has more private information about market-return rate, manufacturer can screen out the private information of the retailer through the contract menus in the terms of return price and revenue sharing ratio.