Revenue management for returned products in reverse logistics
CitationKUMRU, M. (2009). Revenue management for returned products in reverse logistics. In ÖZAYDIN, Ö. (ed.). Proceedings of the International Conference on Prospects for Research in Transport and Logisticson a Regional - Global Perspective. pp. 203-209. İstabnul, Doğuş University.
Returned products take a considerable part in logistics. Recovering the returned products is one of the management issues of manufacturing companies. As an element of reverse logistics, product recovery encompasses several options, i.e., remanufacturing, repair, refurbishing, cannibalization and recycling, which are classified based on the degree of disassembly and the quality level of the recovered product. Difference in quality levels of recovered products draw different prices in the secondary markets. This situation gives rise to revenue management, i.e., to set the prices of recovered products of different quality levels such that the total revenue is maximized. One of the decision problems is the location of collection and inspection points in order to minimize the cost of reverse distribution. In our framework, we include preliminary inspection, that requires physical checking etc. and needs no substantial investment, at the collection points, and detailed inspection at the remanufacturing facility.In this paper, we modify the pricing model of Subrata Mitra to maximize the expected revenue from the recovered products. Numerical example is included for illustration.