A returns policy for distribution channel coordination of perishable items

This paper deals with a retailer's operating policies for a perishable product when he agrees with his supplier not to return the unsold product to his supplier provided that the supplier gives some discount on the wholesale price. Mathematical formulations are developed based on a periodic-review inventory model under last-in-first-out and first-in-first-out issuing policies. The demand rate is assumed to be a function of the retail price and instantaneous inventory level. Decision variables are the amount of supplier's price discount that the retailer can accept in return for adopting the no-returns condition, the retail price and order size. Also, numerical examples are solved with Tabu search algorithm for sensitivity analysis.