Research on Returns Policy of Two-level Supply Chain under the Condition of Demand and Price Correlation

The epidemic commodity is a kind commodity with the characteristics of indefinite demand and short-life cycle. The manufacturers have to adopt different returns policies from the ordinary commodities'. In this paper, the authors analyze thoroughly about related profits of the two-level supply chain composed of a manufacturer and a retailer using the Cost-Revenue method under the condition of market demand and price correlated. Models with and without the returns policy are built, and a comparison of the bilateral profits of the manufacture and retailer's and supply chain overall profit is discussed. Finally, the authors make a numerical analysis to the models with and without the returns policy making using of Mathematics software. The result indicates that the supply chain is optimized by using returns policy, but the improvement rate of manufacturer's profit is much smaller than the retailer's. In the other word, it is advantageous to the retailer. But to the manufacturer, it must consider more carefully. Otherwise, the profits may be damaged badly.