Study On Return Policy Under Manufacturer-dominated Supply Chain

In recent years, with the rapid growth of social economy, the consumer market demand is also expanding, especially for personalized and diversified products, so companies have to provide more types of products for consumers to choose. In particular, with the rise of e-commerce, consumers can buy products more convenient and quick, but sometimes consumers themselves are not sure whether they really need a product, and the consequent problem is that consumers return.Consumers will return affect the company's operations and earnings to some extent, in the face of consumer return market, how to provide the best return policy is a problem companies need to solve. 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. Assuming that market demand is linear correlation with return price. We first analyze 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, in this case, retailer can only get reserved earnings, and all the supply chain surpluses accrue to the manufacturer. However, when the retailer has more private information about market return rate, manufacturer can use principal-agent theory to screen out the private information of the retailer through the contract menus in the terms of return price and revenue sharing ratio. Finally, we make a comparative analysis of the manufacture's earnings and the retailer's earnings under symmetric information and asymmetric information, enriching the content of the article through numerical simulation.