Modelling product returns in inventory control – exploring the validity of general assumptions

The literature on stochastic models for inventory control with product returns commonly makes the following simplifying assumptions: demand and returns are each a homogeneous (compound) Poisson Process, and the processes are independent of each other. In this paper, we explore the validity of these assumptions by analysing real data on return flows. In addition, we discuss practical implications of our findings and we provide insights on information management for inventory systems with return flows.