Int. J. of Industrial and Systems Engineering   »   2011 Vol.9, No.1

 

 

Title: Managing sales return in dual sales channel: its product substitution and return channel analysis

 

Author: Erwin Widodo, Katsuhiko Takahashi, Katsumi Morikawa, I. Nyoman Pujawan, Budi Santosa

 

Addresses:
Department of Artificial Complex Systems Engineering, Hiroshima University, A1-831, Kagamiyama 1-4-1, Higashi Hiroshima 739 8527, Japan.
Department of Artificial Complex Systems Engineering, Hiroshima University, A1-831, Kagamiyama 1-4-1, Higashi Hiroshima 739 8527, Japan.
Department of Artificial Complex Systems Engineering, Hiroshima University, A1-831, Kagamiyama 1-4-1, Higashi Hiroshima 739 8527, Japan.
Department of Industrial Engineering, Sepuluh Nopember Institute of Technology (ITS), Surabaya 60111, Indonesia.
Department of Industrial Engineering, Sepuluh Nopember Institute of Technology (ITS), Surabaya 60111, Indonesia

 

Abstract: Although many efforts have been devoted to exploring dual sales channel (DSC) financial performance, the issue of managing its sales return is still lacking attention. Mismanagement in such online return handling may threaten channel profitability. Therefore, we propose three scenarios. First, the benchmark scenario is a lost-sales consideration model. The second one is an online facility return scenario, which represents the availability of an online facility to provide product substitution. In accommodating online customer preference to return the product through a conventional store, a conventional store return scenario is also prepared as the third scenario. The first two scenarios cope with the importance of product substitution; meanwhile, the second and the third ones examine the selection of the sales return channel. By analysing the equilibrium values of the total and partial profits given by channel prices as the primary decision variables under Bertrand and Stackelberg schemes, some beneficial insights for managing a DSC by considering its sales return are provided.

 

Keywords: DSC; dual sales channels; sales returns; product substitution; return channel selection; online returns; lost sales; customer preference; product returns; store returns.

 

DOI: 10.1504/IJISE.2011.042539

 

Int. J. of Industrial and Systems Engineering, 2011 Vol.9, No.1, pp.67 - 97

 

Available online: 15 Sep 2011

 

 

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