EOQ model for deteriorating items with resalable returns

In a highly competitive market, no matter for classical retailers or for mail order retailers, offering a return policy to entice customers to purchase items has become an inevitable strategy. This paper aims to investigate the problem of jointly determining order size, selling price and selling period of an inventory management for deteriorating items with resalable returns, in which we restrict the assumptions made by Vlachos and Dekker [9] and Mostard et al. [6] as follows: (1) returns are allowed only within a certain time frame, thereafter, no return is accepted; (2) money is fully reimbursed by retailer; (3) returns can be resold and returned several times per period. In addition, both the effects of deterioration and holding cost are incorporated to make our proposed model more realistic and pragmatic with regard to retail sales. Meanwhile, as proposed by Vlachos and Dekker [9], we defined return rate in terms of percentage of demand, and hence an average distribution approach to model inventory behavior allowing undamaged returns that can be resold immediately. Mathematical analyses of optimal solution are presented, in consequence, numerical examples are computerized comparatively from which many valuable contributions are concluded.