Modeling for Return Policy with Retailer's Combined Decision Bias

Abstract

This paper considers a supply chain model in which a single supplier sells a single product to a single retailer who faces the newsvendor problem. The retailer has combined decision bias. The results show that the supply chain can achieve channel coordination with return policy, the return price increases as the retailerpsilas waste-averse preferences increases and decreases as stockout-averse preferences increases. And we demonstrate that the expected profit and utility of return policy are more than that of the decentralized decision making system by using numerical examples.