Commercial used apparel collection operations in retail supply chains

Abstract

Motivated by the commonly observed commercial used apparel collection (UAC) programs in fashion retail supply chain operations, this paper analytically explores the associated operational challenges that firms face. First, in the basic model, we consider the case when a fashion retail brand promotes its UAC program and collects the used apparel from consumers. Depending on the conditions of the collected apparel products, the fashion retail brand will classify and either donate them for charity or send them to remanufacturing. For either case, the fashion retail brand gains a benefit. We analytically derive in closed-form the optimal promotion effort and study the mechanism for “profit” coordination. Our results indicate that many traditional supply chain contracts fail to achieve “profit” coordination. Thus, the effort cost sharing (ECS) contract is proposed and proven to be effective for “profit” coordination. Finally, to check the robustness of findings from the basic model, we examine various UAC practice related extended models, such as i) consumer coupon offering, ii) “no remanufacturing” model, iii) consumer heterogeneity in environmental consciousness, iv) own-brand collection vs any-brand collection. Our findings show that the qualitative insights continue to hold in the extended scenarios. Some novel scenario-dependent findings are also obtained. Insights derived in this paper not only contribute to the literature but also provide scientifically sound managerial guidance and insights to practitioners on how UAC programs can be best operated.