A study on return policy considering the disposal cost and efficiency of the dead stock

Study on the pricing and order problem of a decentralized supply chain composed of a manufacturer and a retailer. In this supply chain, the manufacturer acts as the leader of the Stackelberg game and makes decisions for the whole supply chain benefits. Considering the return cost and the disposal efficiency of the dead stock, we built the model of the return policy and theoretically analyzed the application conditions. When the return policy is not applicable, we suggested using mark down money contract instead of the return policy to coordinate the supply chain. At last, we confirmed the two contracts with numerical examples.