Optimal Return Service Charging Policy for a Fashion Mass Customization Program

Choi, Tsan‐Ming

doi:10.1287/serv.1120.0036

Cited by 80 publications

(43 citation statements)

References 27 publications

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“…This finding is similar to Choi [26], which indicates that fashion firms may offer free return service to their registered members. In our model setting, this happens when the fashion brand quotes a sufficiently higher wholesale price in scenario M than that in scenario R. For the fashion brand, which strategy is better?…”

Section: Proposition 4 Given τ R When Wsupporting

confidence: 82%

“…The buy-back contract has been extensively investigated in the literature on supply chain coordination [24,25], especially the fashion supply chain [26,27]. Choi [26] studies optimal return service-charging policy for a fashion mass customization program, and finds that fashion firms offer free return service to registered members, which is similar to our findings in Proposition 4. Li et al [27] conduct a mean-variance analysis of a fast fashion supply chain with returns policy.…”

Section: Literature Reviewsupporting

confidence: 79%

“…In this section, we consider a buy-back contract to achieve channel coordination, because buy-back contracts are popular in the fashion industry and extensively used to coordinate the fashion supply chain [26,27]. Specially, we consider a buy-back contract with return cost (repacking, logistics, etc.)…”

Section: Supply Chain Coordination Under a Buy-back Contractmentioning

confidence: 99%

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Sustainability Analysis and Buy-Back Coordination in a Fashion Supply Chain with Price Competition and Demand Uncertainty

2016

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Abstract:Supply chain sustainability has become significantly important in the fashion industry, and more and more fashion brands have invested in developing sustainable supply chains. We note that dual channel system comprising a brand-owned direct channel and retail outsourcing channel is quite common in the fashion industry, and in the latter, buy-back contract is popular between brands and retailers. Therefore, we build a stylized dual channel model with price competition and demand uncertainty to characterize the main properties of a fashion supply chain. Our foci are the sustainability analysis and the channel coordination mechanism. We first design a buy-back contract with return cost to coordinate the channel. We then study supply chain sustainability and examine the effect of two key influencing factors, i.e., price competition and demand uncertainty. Interestingly, we find that a fiercer price competition will lead to a more sustainable supply chain. From the perspective of supply chain managers, we conclude that (1) if managers care about environmental sustainability, fierce price competition is not a suggested strategy; (2) if managers care about economic sustainability, fierce price competition is an advantageous strategy. We also find that high demand uncertainty results in a less sustainable supply chain, in both an environmental and economic sustainability sense.

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Section: Proposition 4 Given τ R When Wsupporting

confidence: 82%

Section: Literature Reviewsupporting

confidence: 79%

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Sustainability Analysis and Buy-Back Coordination in a Fashion Supply Chain with Price Competition and Demand Uncertainty

2016

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“…In the presence of fraudulent returns, Ülkü et al (2013) analytically explore the optimization problem on both the price and the allowable return period from the retailer perspective. Choi (2013) studies the service charging policies for consumer returns under the mass customization program in the fashion industry. The author identifies the conditions related to the level of risk in which offering a full refund for consumer returns is optimal.…”

Section: Coordination In the Presence Of Consumer Returnsmentioning

confidence: 99%

Pareto Improving Supply Chain Coordination Under a Money-Back Guarantee Service Program

2017

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Abstract. Money-back guarantee (MBG) is a well-known service offered by many retailers. Under the MBG policy, a purchased item by a consumer can be returned for a full refund. In this paper, we explore a supply chain (SC) system comprising of one retailer, which offers the money-back guarantee policy and faces a stochastic demand. With a given supply contract offered by the supplier, the retailer makes decisions on the order quantity and the market coverage of the money-back guarantee service. With reference to real-world practices, we examine three models, namely, (1) the traditional wholesale pricing model without the buyback contract, (2) the model with a buyback contract (between the supplier and the retailer) for unsold items, and (3) a dual-buyback (DB) contract model for both unsold and consumer returned items. We find that using the buyback contract alone for unsold items cannot achieve Pareto improving supply chain coordination, whereas the DB contract can. Numerical findings also indicate that the DB contract can lead to an expansion of the money-back guarantee service program to cover more customers. This paper's findings support the implementation of the DB contract, which is commonly seen in the industry, for efficient supply chain management in the presence of the money-back guarantee service program.

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“…Another related issue is the supply chain members' attitude to loss. Due to the highly uncertain demand in the fashion industry, buy-back contracts are widely provided by the suppliers, i.e., the unsold inventory of the retailer at the end of the selling season can be returned to the supplier [9][10][11]. Then, the demand risk is shared between the supplier and the retailer, and the supplier's attitude towards loss becomes important [12].…”

Section: Introductionmentioning

confidence: 99%

Sustainability Analysis of Supply Chains with Fashion Products under Alternative Power Structures and Loss-Averse Supplier

2017

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Considering a supply chain with fashion products comprising of a supplier and a retailer, we study the sustainability of the supply chain with alternative power structures (either the supplier or the retailer has the option of acting as a leader to make the decisions first). We also examine the impact of the supplier's attitudes to loss on the supply chain's sustainability and profitability. We build game theoretical modes to characterize one property of the fashion industry: the wide use of buy-back contract, and obtain the following results: (1) Compared to wholesale price contract, buy-back contract reduces the sustainability of the supply chain, and this result is robust with alternative power structures. (2) Under alternative power structure, the sustainability index is increasing in the buy-back price in the supplier-as-the-leader scenario, while decreasing in the retailer-as-the-leader scenario. That is, the relationships between sustainability and buy-back price is completely reversed when the leader is changed. (3) The sustainability is improved when the supplier acts as the leader and the buy-back price is lower than a threshold, but the contrary holds when the buy-back price is high. (4) Buy-back contract helps to improve the sustainability of the supply chain when supplier is extremely loss-averse, because the loss-averse supplier has the incentives to reduce the ordering quantity as well as the overstocking risk.

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Optimal Return Service Charging Policy for a Fashion Mass Customization Program

Cited by 80 publications

References 27 publications

Sustainability Analysis and Buy-Back Coordination in a Fashion Supply Chain with Price Competition and Demand Uncertainty

Sustainability Analysis and Buy-Back Coordination in a Fashion Supply Chain with Price Competition and Demand Uncertainty

Pareto Improving Supply Chain Coordination Under a Money-Back Guarantee Service Program

Sustainability Analysis of Supply Chains with Fashion Products under Alternative Power Structures and Loss-Averse Supplier

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