Game Analysis on Return Costs of Dual Channel Supply Chain Considering Service

Abstract

In order to solve the problem of return cost, this paper studies the retailer-led supply chain based on Stackelberg game theory, in which retailers and manufacturers are set up to maximize their profits as a goal considering service and the return cost. Discussing the problem of return cost when the retailer or the manufacturer exists in service. The study found when retailers exist services and the manufacturer bear the cost, the manufacturer reduce the cost of return to bear the loss of profits by increasing the wholesale price, the cost of return commitment will not affect the retailer's sales price and service levels, so the total profit of the supply chain no matter who is responsible for the return of the cost is equal. When the manufacturers has the service, the total profit of the supply chain when the retailer takes the return cost is greater than the total supply chain profit when the manufacturer assumes the return cost.