Analysis of results obtained on return contracts with warranty

Abstract

Literature on supply chain contract has extensively dealt with the coordination models with respect to different supply chain contracts and different properties and results obtained in the said context. The current study obtains results for coordination involving different contract parameters, exogenous variables when a warranty clause is also considered along with two return policy contracts viz: buyback contract and quantity flexibility contract. It also investigates whether the key properties hold good in this extended model where warranty related variables are also considered. The study provides a guideline to the channel coordinator to optimally design the contract parameters and warranty length to achieve channel coordination and optimal supply chain profit. The model is built considering a two stage supply chain and is applicable to different demand distributions. The theoretical results discussed in the present study can be suitably used in designing contracts and warranty parameters in different supply chains.