Product pricing and return refund strategy in two layer supply chain

In the current situation of globalization, many businesses have adopted and implemented supply chain strategies, especially as their operations become more worldwide. Management of corporate operations over extensive supply chains is becoming increasingly important. Product recycling and product return policy are sustainable strategies to reduce environmental and economic deterioration. Additionally, to increase product sales with customer satisfaction, a return refund strategy is an essential strategy for a business organization in a competitive market. In this research, we have developed a manufacturer-retailer two-layer supply chain model with a return-refund strategy. We have formulated price and refund amounts dependent on demand for multiple products. The sales price, refund amount, and market demand are different for each product. An integrated centralized scenario has been discussed under profit maximization criteria. The prime objective of the research is to find out the optimum product pricing strategy and return-refund strategy to maximize the manufacturer’s profit, the retailer’s profit, and the overall supply chain. A numerical derivation is demonstrated to understand the behavior of significant elasticity parameters with some managerial insights. Finally, some possible extension of the present research is discussed in future perspectives.