Research on Order Strategy Considering Consumer’s Return Behavior Under Inventory Sharing

Abstract

AbstractConsumer’s uncertain return behavior has brought great challenges to dual-channel retailers’ order decisions. Based on consumers return behavior and random market demand, this paper establishes newsboy models under independent operation strategy and inventory sharing strategy, and studies the optimal order decisions of dual channels. Then by comparing the optimal results under different strategies, the optimal strategy of the dual-channel retailer is determined. Eventually, dual-channel return rates effects on channels are discussed. The results show that (1) The inventory sharing strategy is better in terms of minimum order quantities or maximum profits; (2) When the return rate of one channel remains constant, a certain channels return rate hurts its own order quantity. When the return rate of one channel increases, a certain channels return rate does not always hinder the increase of its own order quantity; (3) The profit of a certain channel is more easily affected by its return rate, and the condition where it earns profits becomes more stringent with the increase of another channels return rate.KeywordsInventory sharingReturn behaviorOrder strategyDual-channel