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Managing Sales And Product Returns Under The Word-Of-Mouth Effect : Pricing, Quality, And Restocking Fee Decisions, Sun Yuen Hui

Theses & Dissertations

This paper considers a two-echelon supply chain involving a manufacturer and a retailer who make their pricing, quality, and restocking fee decisions under the word-of-mouth (WOM) effect. To investigate the decision-making problem for the sales and product returns, we construct a leader-follower game model in which the manufacturer first determines his quality effort and the wholesale price and the retailer then decides on her retail price and the restocking fee. Our results show that the wholesale and retail prices under no WOM effect are smaller than those when the WOM effect exists; and, as the WOM has a higher impact …