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Access Type

Open Access

Document Type


Degree Program

Industrial Engineering & Operations Research

Degree Type

Master of Science in Industrial Engineering and Operations Research (M.S.I.E.O.R.)

Year Degree Awarded

January 2008

Month Degree Awarded



Price Postponement, Reverse Logistics, Consumer Returns, Supply Chain Coordination


In this thesis, we analyze the effect that price postponement has on the performance and coordination of a two-stage supply chain facing consumer returns. In an extended news-vendor setting with a single product, a single manufacturer and a single retailer who faces stochastic and price-dependend demand, we allow the retailer to postpone his decision on the retail price until after demand uncertainty is resolved. A certain percentage of sold products is returned, which results in reverse logistics costs and a full refund for both consumer and retailer. In this setting we conduct an extensive computational study to investigate the value of considering returns in the optimization approach if the decision on the retail price is postponed. Moreover we analyze the value of the additional information gained by price postponement both if returns are considered or ignored. We present the impact on the equilibrium values of profits and decision variables for both the centralized and decentralized system and consider different incentive schemes to find out whether coordination is possible.


First Advisor

Ana Muriel