Customer Returns Research Articles

Using improved genetic algorithm under uncertain circumstance of site selection of O2O customer returns

Online-to-offline (O2O) e-commerce supports online purchase and offline servicing. In recent years, with the growth of online shopping in China, O2O has become a new popular mode of e-commerce appliance. Buying online and returning offline are becoming a dominant shopping mode. The returns of customer should be collected to be treated in a more cost-efficient manner. To this end, this paper aims to propose an integer programming model to minimise the cost in construction couple with operating charges by optimising the sites of reverse logistics with the customer returns. For lowering storage costs, physical stores and their geographical sites should be far away from the residential area. In addition, this paper designs an improved genetic algorithm for solving two-stage heredity under random circumstance in that this model builds up multilayer reverse logistics network for recycling customer returns. Both the simulation and numerical examples prove the effectiveness and feasibility of this improved genetic algorithm.

Multifeature, Sparse-Based Approach for Defects Detection and Classification in Semiconductor Units

Automated inspection systems play an important role in manufacturing to guarantee higher quality and reduce production costs. In the semiconductor manufacturing industry, assembly and testing processes are getting more complex, resulting in a greater tendency of defects to impact the production process. These defects can cause field failures and can result in customer dissatisfactions and returns. Currently available defect detection and classification systems are customized and hard-wired to the detection of particular classes of defects and cannot deal with new unknown classes of defects. This issue is aggravated by the very small sample size of available anomalies for learning, by the data imbalance problem, since the number of defective samples is significantly much smaller than the number of normal samples, and by the presence of noise. This paper presents a novel multifeature, sparse-based defect detection and classification approach that uses the stacking concept to enhance the classification accuracy. The stacking-based classifier is augmented with a novel adaptive over/downsampling technique to deal with the data imbalance problem. A new pruning technique is proposed to eliminate bad base learners. Shortage of defective units, similarities within different classes of defects, wide variation within the same defect class, and data imbalance are the basic challenges to deal with. Experimental results on real-world data from Intel show that the proposed approach results in a high classification accuracy as compared with the existing methods. Note to Practitioners —The basic motivation of this paper is to design an automated cost-effective, adaptive, and intelligent defect detection and classification system that is easy to train using a small-size sample set of defects and that is robust to noise. The system is scalable in terms of the numbers and types of defects and features, which leads to a shorter development cycle. The presented system is immediately applicable to different types of defects. Inputs of the system are grayscale images. These images are processed to perform defects detection, features extraction, and classification.

Reverse logistics operations in a pharmaceutical retail environment

Not all the sales/deliveries at consumers'/intermediaries' end are always final. They may return it for a number of reasons. Consumers'/intermediaries' may also often find some medicines undesirably accumulated. Retailers may have such accumulations for poor sales, unexpected customer returns, perishability, etc. Therefore, another similar flow (reverse logistics) is required to carry such medicines backward for recovering value/proper disposal. This research aims at providing a detailed account of reverse logistics management of undesired medicines, various related issues and its performance, with respect to Indian pharmaceutical retail environment. What is being done (practices), why it is being done (drivers), how it is being done (return conditions) and what inhibits (barriers) are the major issues examined. Besides, the performance of reverse logistics programs was evaluated from the retailers' perspectives. The findings of this study are expected to establish some evidence regarding the prevalent reverse logistics practices and related issues for academicians and practitioners.

Reverse logistics operations in a pharmaceutical retail environment

Not all the sales/deliveries at consumers'/intermediaries' end are always final. They may return it for a number of reasons. Consumers'/intermediaries' may also often find some medicines undesirably accumulated. Retailers may have such accumulations for poor sales, unexpected customer returns, perishability, etc. Therefore, another similar flow (reverse logistics) is required to carry such medicines backward for recovering value/proper disposal. This research aims at providing a detailed account of reverse logistics management of undesired medicines, various related issues and its performance, with respect to Indian pharmaceutical retail environment. What is being done (practices), why it is being done (drivers), how it is being done (return conditions) and what inhibits (barriers) are the major issues examined. Besides, the performance of reverse logistics programs was evaluated from the retailers' perspectives. The findings of this study are expected to establish some evidence regarding the prevalent reverse logistics practices and related issues for academicians and practitioners.

Multi-stage manufacturing/re-manufacturing facility location and allocation model under uncertain demand and return

Manufacturing/re-manufacturing facility location and allocation systems have attracted many researchers and manufacturers because of globalisation, increasing competition, technological advancement and reduced product life cycle. In this paper, a multi-stage, multi-product capacitated closed-loop supply chain (CLSC) network is proposed with an objective to optimise the total supply chain cost. The network also includes reuse, reprocessing and disposal of parts. Customer demands and returns are fluctuating, thereby causing an uncertain environment. To handle the uncertain parameters, a scenario-based mixed integer linear programming was developed and implemented in a cartridge manufacturing industry. Scenarios were framed by changing the demand, return rate, reprocessing rate, reassembling rate and disposal rate. Totally, 125 scenarios were analysed and effect on the percentage change in total cost was studied. The model is solved using CPLEX, an optimisation tool. Computational properties and complexities in solving the problems are studied. Some insights are provided for the model based on different scenarios.

Pricing and order decisions with option contracts in the presence of customer returns

This paper develops a newsvendor model to examine the impact of customer returns on a firm's pricing and order decisions, in a case where the firm faces price-dependent stochastic demand and has the option of purchasing option contracts. The firm needs to decide the optimal initial order quantity, option order quantity, and retail price simultaneously. The firm's joint optimal decisions are derived for both single- and multi-periods. We examine the impact of two typical forms of customer returns: proportional to product sold, and increasing with selling price. We demonstrate that when customer returns increase with products sold, the firm will set a higher price and reduce both initial order quantity and option order quantity through the wholesale price contract and option contract, respectively, for the single-period problem. In the multi-period problem, when customer returns increase with products sold, the impact of customer returns depends strongly on the variation in product purchase costs (order costs and purchase costs of options) in each period. When customer returns increase with selling price, however, the firm will cut its price, and initially order more products with fewer options for both the single- and multi-period problems. Furthermore, numerical examples confirm that the presence of customer returns results in a significant decrease in the firm's profit. Option contract can be a tool to mitigate the negative impact of customer returns as with the option contract, the more the customer returns, the more the firm is motivated to provide a returns policy.

Who should be pricing leader in the presence of customer returns?

We examine how competing retailers should choose product returns strategies and leadership strategies, and how product returns strategies and leadership strategies impact the prices, market shares, and profits of each retailer in a duopoly. We find that if the transferring costs of a returned product can be offset by its salvage value, the retailer, whether of high or low quality, should offer a Money-Back Guarantee (MBG) returns policy. We also show that the leadership strategy in a duopoly setting depends on the retailer's efficiency in selling the product (quality and acquisition cost) and handling customer returns (if an MBG is offered), relative to the competing retailer. We find that both retailers will choose sequential games and we identify when a retailer will be a pricing leader or follower in a competitive market. We identify the globally optimal leadership strategy for the duopoly when a retailer's efficiency in selling the product and handling customer returns is comparable to that of the competing retailer. In addition, we show that a retailer's MBG returns policy has a significant effect on the leadership strategy in duopoly competition. Numerical examples are also included to illustrate the major results.

Barriers to product return management in automotive manufacturing firms in Malaysia

The increasing of global warming and depletion of natural resources has become a concern for society, government and industry. There is a growing importance on recovery of used materials and products amongst industry players. The Malaysian government has conducted many green campaigns and provided incentives for some green practices; however, the adoption of product return and recovery management is still low amongst automotive manufacturers. Therefore, it is important to understand the obstacles towards product return adoption so that the countermeasures can be thought of to overcome this situation. The objective of this paper is to investigate the barriers of product return management amongst automotive manufacturing firms in Malaysia. A total of 228 automotive manufacturers and assemblers were identified as the sampling frame, which was selected based on the census sampling method due to the limited sample size of the study. The data was analysed using the Partial Least Squares (PLS) with the measurement model had shown sufficient model fit and the structural model revealed that the data supported the hypothesised model. The large effect size and higher than zero values of the predictive capabilities imply that the model has sufficient variance explained for the predictive capability of the hypotheses testing of the study. Based on the results, this study has found that the resource barrier has a significant effect on the level of adoption of product returns. Specifically, the resource barrier and the extent of the manufacturing return adoption were positively related (β = 0.361, p < 0.01), resource barrier and the extent of the distribution returns (β = 0.252, p < 0.05), and resource barrier and the extent of the customer returns (β = 0.333, p < 0.01). The result reflects that automotive manufacturers have a lack of resources to afford the product return implementation; as a matter of fact, high initial investments in terms of finances, human resources, and time are required for the product return adoption. Other variables of the study, such as the attitudinal and perception barrier, information barrier, and technical barrier, were found to be insignificant with the adoption of product return management. As a conclusion, this study discovered that the resource barrier was the major obstacle that impeded the automotive manufacturers in Malaysia from adopting the product return management. The outcome is expected to help policy makers, manufacturers as well as stakeholders in setting appropriate policies and strategies to improve the product return and recovery management adoption.

When to introduce an online channel, and offer money back guarantees and personalized pricing?

Sales through an online channel are increasingly popular in the retailing industry. Customers, however, cannot touch or feel a product before they purchase online. This leads to much higher rates of customer returns in the online channel, which in turn leads to significant costs to retailers. In this paper, we develop a model of a dual-channel structure with online and brick-and-mortar channels, in order to determine when a retailer should introduce an online channel and how it should define returns policies for the two channels. We identify the conditions under which a retailer should choose a dual-channel structure, and show that the retailer should offer a Money-Back Guarantee (MBG) in a channel as long as the net salvage value of the returned product is positive in that channel. In addition, if uniform pricing is used in both channels, it is optimal for the retailer to simply set the prices for each channel as if the two channels were operated separately. Our analysis leads to a simple three-step process to help the retailer make a channel selection, choose a product returns policy, and decide on price. We also examine the implications of personalized pricing (PP) in the online channel for the retailer's channel selection and choice of returns policy. We show that PP makes the online channel more attractive and makes the retailer more likely to adopt MBGs. The impact of PP on pricing for both channels is also discussed.

The impact of customer returns in a supply chain with a common retailer

Efficient distribution of the product in a supply chain is a critical issue in supply chain management. In the paper, we study a manufacturer Stackelberg supply chain in which a retailer can sell either or both of two brands, a well-known brand and a new brand, in a market supplied by two manufacturers. The two brands are differentiated by customer satisfaction rate. The supply chain involves both vertical competition between the retailer and manufacturers, and horizontal competition between the two manufacturers. We identify the conditions under which the retailer should choose one or both of the two manufacturers, and we show that in certain circumstances, the retailer will prefer to work with both manufacturers, even though one brand of product may have no sales. We find that whether a money-back guarantee (MBG) returns policy should be offered for the supply chain depends only on whether or not the retailer can recover the value of the returned product efficiently, even when the retailer incurs a net cost by accepting returns. We also show that an MBG enhances the profit of the manufacturer with low satisfaction rate, resulting in an increase in both the wholesale price and demand, but it has an opposite impact on the manufacturer with high satisfaction rate. In addition, an MBG enhances the retailer's profit and expands the overall market. Numerical examples are included to illustrate the major results.

Customer returns model in a dual-channel supply chain

Purpose – The purposes of this paper is to propose a customer returns model in a dual-channel supply chain where a customer can return the purchased product to the retailer or the manufacturer and obtain an equilibrium of selling prices and refund prices and the optimal profit when considering customer returns in the centralized and decentralized dual-channel supply chain. Design/methodology/approach – This paper mainly uses the game theory technique to analyze the problem. The manufacturer and the retailer are vertically integrated in the traditional channel, and the results of the centralized dual-channel supply chain are obtained. Then, the Stackelberg game was adopted to analyze the decentralized dual-channel supply chain. Finally, the detailed numerical simulation is proposed to obtain straight-forward insights for the industrial managers. Findings – The mathematic analysis used shows that the main findings of this paper are: in the centralized scenario, the retailer and the manufacturer will charge higher selling prices when they offer return policy, and the demand for each channel increases, which results in higher profit; and the price and refund price of the direct channel in the centralized and decentralized dual-channel are the same, respectively. Originality/value – Most previous literatures highlight that return policy plays an important role in supply chain which considering one channel. But there is no study on the customer return policy in dual-channel supply chain. This paper is a further step to model the effects of customer returns policy on the pricing policy and optimize the profits in a dual-channel supply chain. This paper analyzes the pricing and refund strategies and gets an equilibrium in the centralized and decentralized dual-channel supply chain scenarios.

Competing with customer returns policies

Return of products purchased by customers is a common phenomenon in the retail industry and results in costs to retailers. In practice, most retailers implement a full-refund policy, but the terms of customer returns policies vary. A customer returns policy serves as a post-customer service, and is a determinant factor in the customer’s decision to purchase the product, in addition to other factors, such as the price of the product. In this paper, for competing retailers who face customer returns, competition from multiple retailers and uncertain customer valuations of the product, we develop a model to examine when retailers can survive and what pricing strategy they should implement in a competitive market. We identify the co-existence conditions for multiple retailers and the existence conditions of a Nash equilibrium among competing retailers. We also show the impact of customer returns on the retailers’ pricing and market share, as well as on profits in a competitive market. Numerical examples are included to illustrate the major results discussed in the paper.

A Low-Impedance Projection Welding Device for Large Package Hermetic Sealing

Electronic packages for medical, communications, defense, and other applications are often hermetically sealed into metal containers using projection welding. However, current projection welding machines may not reliably seal packages with weld perimeters exceeding 7.6 cm (3.0 in), and also may expel metallic particles into the package. This paper describes a novel low-impedance projection welding device that can reliably weld large packages with up to 25.4 cm (10.0 in) weld perimeters with zero weld expulsion and zero weld defects, using half the energy required by traditional machines. The device does not rely on conventional power supplies and transformers, and delivers ≫120kA of weld current while operating from standard electrical outlet (110V, 15A circuits), and requires no external bus bars or cooling system. The system architecture can be easily scaled upward to significantly increase the delivered weld current and hermetically seal packages with weld perimeters greater than 25.4 cm (10.0 in). A commercial version of this device has welded more than 1 million medical, communications, and military electronic packages with zero customer returns. Data is presented showing the weld parameters for a variety of commercial and military hermetic electronic packages.

Impact of Information Sharing Regarding Customer Returns Ratio on Optimal Sales Strategy under E-commerce

A correct information of customer returns ratio under e-commerce is not always shared between supply chain (SC) members. Also, it is important issue for SC members to handle the unsold products in a market. This paper discusses the impact of information sharing of customer returns ratio on an optimal sales strategy including resale of customer returns and buyback policy for a SC under e-commerce with a manufacturer and a retailer. A retailer sells a single product and resells the resalable customer returns in the same market. A manufacturer produces the products and buys back the unsold products as to their quality from the retailer. The integrated SC (ISC) determines the optimal product order quantity to maximize the expected profit of the whole SC. The decentralized SC (DSC) makes the optimal decisions for order quantity and the wholesale price of products to maximize the expected profit of each SC member. The effect of information sharing is discussed between SC members under ISC and DSC. The analysis numerically investigates how information sharing of the returns ratio affects the optimal decision and the expected profits under ISC and DSC. Besides, effect of SC coordination to encourage the shift to ISC is discussed.

A Pseudo-Parallel Genetic Algorithm Integrating Simulated Annealing for Stochastic Location-Inventory-Routing Problem with Consideration of Returns in E-Commerce

Facility location, inventory control, and vehicle routes scheduling are three key issues to be settled in the design of logistics system for e-commerce. Due to the online shopping features of e-commerce, customer returns are becoming much more than traditional commerce. This paper studies a three-phase supply chain distribution system consisting of one supplier, a set of retailers, and a single type of product with continuous review (Q, r) inventory policy. We formulate a stochastic location-inventory-routing problem (LIRP) model with no quality defects returns. To solve the NP-hand problem, a pseudo-parallel genetic algorithm integrating simulated annealing (PPGASA) is proposed. The computational results show that PPGASA outperforms GA on optimal solution, computing time, and computing stability.

A Decision Method for Returns Logistics Based on the Customer's Behaviour in E-commerce

Abstract In recent years, many industries have realized that Reverse Logistics (RL) is a necessity for sustainable competitiveness. RL has become a key competence in modern supply chains. And it has been a field of importance for organizations due to growing environmental concerns, legislation, corporate social responsibility and sustainable competitiveness. As the important part of the RL, returns logistics has grown with the development of the E-commerce concept and practice. This study proposes a decision method to determine weather the customer's returns requests are accepted for the logistics enterprise, considering the customer's behaviour. At the beginning, the customers are divided into four types according with their demands. Then, the disruption measurement model is developed based on the categories of the entities in the returns logistics system. And the sensitivity of the time and satisfactions are considered in the research, Furthermore, the framework of the returns logistics is established and decision method for returns logistics based on the customer's behavior is provided. At last, a case study is carried out to evaluate the effectiveness of the method. This will provide a reference for decision-making when they improve the quality of work in Systems Engineering.

An inventory model for non-instantaneous deteriorating items with partial backlogging, permissible delay in payments, inflation- and selling price-dependent demand and customer returns

This paper develops an economic ordering policy model for non-instantaneous deteriorating items with selling price- and inflation-induced demand under the effect of inflation, permissible delay in payments and customer returns. Shortages are allowed and partially backlogged. The customer returns are assumed to increase with both the quantity sold and the product price. The main objective is to determine the optimal selling price, the optimal length of time in which there is no inventory shortage, and the optimal replenishment cycle simultaneously, to minimize the present value of the total profit. An efficient algorithm is presented to find the optimal solution of the developed model. Finally, a numerical example is extracted to solve the presented inventory model using the proposed algorithm.

Joint pricing and replenishment decisions for non-instantaneous deteriorating items with partial backlogging, inflation- and selling price-dependent demand and customer returns

This paper develops an Economic Order Quantity (EOQ) model for non-instantaneous deteriorating items with selling price- and inflation-induced demand under the effect of inflation and customer returns. The customer returns are assumed as a function of demand and price. Shortages are allowed and partially backlogged. The effects of time value of money are studied using the Discounted Cash Flow approach. The main objective is to determine the optimal selling price, the optimal length of time in which there is no inventory shortage, and the optimal replenishment cycle simultaneously such that the present value of total profit is maximized. An efficient algorithm is presented to find the optimal solution of the developed model. Finally, a numerical example is extracted to solve the presented inventory model using the proposed algorithm and the effects of the customer returns, inflation, and non-instantaneous deterioration are also discussed. The paper ends with a conclusion and outlook to future studies.

Coordinating a Supply Chain with Customer Returns and Two-Period Newsboy Problem Using Insurance Contract

For improving the operation of supply chain it is necessary to use coordination mechanisms. This paper investigates the subject of coordination in two-level supply chain using contracts mechanism. By applying contractual relationships among members of a supply chain, double marginalization can be eliminated. We consider a supply chain consisting of one manufacturer and one retailer. A stochastic and two-periodic demand is considered. For obtaining more conformation of model with real conditions, it is assumed that the retailer is faced with return of goods from customer. We determine contractual parameters for achieving the coordination. Modeling and determination of parameters will be done in such a way that win-win condition is provided for both members of supply chain. We compare insurance contract with revenue sharing contract. We find that the expected profit of the supplier with insurance contract will be improved in compared with the revenue sharing contract.

Optimal pricing and lot-sizing policies for an economic production quantity model with non-instantaneous deteriorating items, permissible delay in payments, customer returns, and inflation

This article deals with an economic production quantity inventory model for non-instantaneous deteriorating items under inflationary conditions, permissible delay in payments, customer returns, and price- and time-dependent demand. The customer returns are assumed as a function of demand and price. The effects of time value of money are studied using the Discounted Cash Flow approach. The main objective is to determine the optimal selling price, the optimal length of the production period, and the optimal length of inventory cycle simultaneously such that the present value of total profit is maximized. An efficient algorithm is presented to find the optimal solution of the developed model. Finally, a numerical example is extracted to solve the presented inventory model using our proposed algorithm, and the effects of the customer returns, inflation, and delay in payments are also discussed.