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ISSN : 1598-7248 (Print)
ISSN : 2234-6473 (Online)
Industrial Engineering & Management Systems Vol.17 No.3 pp.373-391
DOI : https://doi.org/10.7232/iems.2018.17.3.373

Risk Analysis and Supply Chain Coordination for Optimal Operation in E-Commerce Environment with Uncertainties in Demand and Customer Returns

Yuta Saito, Etsuko Kusukawa*
Course of Electrical and Electronic Systems, College of Engineering, Osaka Prefecture University, Sakai, Osaka, Japan
* Corresponding Author, E-mail: kusukawa@eis.osakafu-u.ac.jp

Abstract

This paper discusses risk analysis and supply chain coordination (SCC) for the optimal operation in a supply chain under e-commerce environment (e-SC) with the uncertainties in product demand and customer returns. An e-SC consists of a retailer and a manufacturer. The return handlings are discussed regarding customer returns and unsold products. A retailer receives customer returns from a market once and resells the resalable returns in the same market. A manufacturer buys back the unsold products and the un-resold customer returns from the retailer, considering the difference of quality between them. The mean-variance analysis (MVA) with three risk attitudes regarding the above uncertainties is discussed: risk-neutral attitude maximizing the decision maker’s expected profit in e-SC, risk-averse attitude with negative consideration of variance of the relevant profit, and risk-prone attitude with positive consideration of the variance. Using MVA, the optimal operations for product order quantity, the unit retail price and refund ratio of customer returns under the decentralized e-SC (DSC) and the integrated e-SC (ISC) are determined. The analysis numerically verified that each risk attitude on product demand and customer returns affected the optimal operations under DSC and ISC. SCC adjusting the unit wholesale price and buyback prices between members under ISC can shift to ISC.

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