An optimal pricing and quality assessment model for consumer returns in a multi-period closed-loop supply chain

We propose a framework for a single demand and its returns occurring in a multi-period setting. The goal of this study is to determine price and processing quantities of returns for a retailer when she is faced with stochastic returns and numerous quality conditions for returns specific to a particular period. We formulate the expected profit function of a single demand and its returns over the sales periods and analytically derive the optimum price expression. Furthermore, we develop an extensive numerical experiment to analyse the effect of key parameters on the profit and price. The research herein shows that an increasing number of quality categories for returns improves the total profit significantly over the sales periods. Likewise, we find that the number of quality categories for returns can also affect changes in the price indicating the importance of sensitivity of the retail price to the returns quality.