Analysis of bullwhip effect and inventory cost in the online closed-loop supply chain

Abstract

This paper focuses on the impact of return decisions on the bullwhip effect in the online closed-loop supply chain. We investigate the optimal return modes when the inspection system is undertaken by the logistics centre or the remanufacturer. Then, we optimise the online retailers’ return decisions of minimising the inventory cost and bullwhip effect under different supply chain circumstances. Distinctive from previous conclusion that the inspection operation is usually undertaken by the remanufacturer to sort the returned products, the analysis results reveal that the optimal decision of mitigating the bullwhip effect in most cases is to set the inspection system on logistics centre. Besides, consumers’ return and exchange behaviours in e-commerce have different impacts on the supply chain efficiency. The product return can not necessarily mitigate the information distortion in online closed-loop supply chain. The research provides insights for managers to strategise about return policies and resource allocation in different e-commerce contexts.

KEYWORDS:

• Closed-loop supply chain
• inspection
• e-commerce
• return
• bullwhip effect

Acknowledgements

This work was supported by the Key Program of National Natural Science Foundation of China (71732006), and the Major Program of National Natural Science Foundation of China (72192830/72192834/72192833), and the Youth Program of National Natural Science Foundation of China (72202216).

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The authors confirm that the data supporting the findings of this study are available within the article.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [grant number 72202216, 71732006, 72192834, 72192830, 72192833].

Notes on contributors

Dandan Gao

Dandan Gao received the B.S. degree in Electronic Commerce from the Hunan University of China, Changsha, China, in 2015, and the Ph.D. degree in management science and engineering from Xi’an Jiaotong University, Xi’an, China, in 2021. She is currently an assist Professor with the Business Administration, Zhengzhou University. She has authored three articles in the IEEE Transactions on Engineering Management, and the other journal. Her research interests include supply chain management and reverse logistics.

Nengmin Wang

Nengmin Wang received the B.S. degree in investment economy, and the M.S. degree in management science and engineering from the Central South University of Technology, Changsha, China, in 1997 and 2000, respectively, and the Ph.D. degree in management science and engineering from Xi’an Jiaotong University, Xi’an, China, in 2003. He is currently a Professor with the Industrial Engineering Department, Xi’an Jiaotong University. He has authored over 60 articles in peer-reviewed academic journals, including the IEEE Transactions on Engineering Management, the IEEE Transactions on Intelligent Transportation Systems, the European Journal of Operational Research, the International Journal of Production Economics, the Annals of Operations Research, the International Journal of Production Research, the Journal of Management Information Systems, the Computers and Operations Research, the Computers and Industrial Engineering, and the Journal of Operational Research Society. His research interests include supply chain management and big data.

Zhengwen He

Zhengwen He received the B.S. degree in mechanical engineering from Xi’an Jiaotong University, Xi’an, China, in 1989, and the M.S. degree in mechanical and electronical engineering from the Xi’an University of Technology, Xi’an, in 2001, and the Ph.D. degree in business administration from Xi’an Jiaotong University, in 2004. He is currently a Professor with the Industrial Engineering Department, Xi’an Jiaotong University, and a Member of the Scheduling Committee of the Operations Research Society of China, Beijing, China. He has authored over 50 articles in peer-reviewed academic journals, including the European Journal of Operational Research, the Annals of Operations Research, the Journal of Operational Research Society, the Computers and Operations Research, the Computers and Industrial Engineering, and the International Journal of Production Research. His research interests include project management and optimisation.

Li Zhou

Li Zhou received a BSc and an MSc in Engineering, and a PhD in Management Science and Engineering. Prior to joining the University of Greenwich, she was a post-doctoral researcher at Logistics Systems Dynamics Group (LSDG), Business School, Cardiff University, UK. She has had over 130 articles published in various forms including journal papers, edited book chapters, and conference papers. Her work appears (inter alia) in internationally recognised and high-impact journals such as Production and Operations Management, European Journal of Operational Research, International Journal of Production Economics, OR Spectrum, OMEGA-The International Journal of Management Science, and Supply Chain Management: An International Journal. Her research interests include supply chain management and reverse logistics.