Inventory Control in Supply Chain System with Returning Goods

Abstract

This paper represents a multi-echelon inventory model as a subsystem of supply chain and considers (s,Q)-type inventory policy for a supply chain inventory system with multiple suppliers replenishing products with a central warehouse, which in turn distributes them to retailers. The objective of this research is to determine an appropriate reorder points and order quantity for retailers and warehouse considering the service level. Customers are divided into two groups: Customers who come to buy new goods, and customers who come to exchange products. Returning goods in happened frequently in real world. Therefore the demand for returning goods is important in inventory planning. We apply Bernoulli feedback model to model the situation of returning goods.