Bundle pricing, reservation, and refund policies in a two-level supply chain

Abstract

Refunding and bundling reservation are known as two popular methods to increase profit and they have gained the attention of many researchers in recent years. One major application of refunding policy emerges in online product sales. In this case, consumers can be refunded by returning goods that are against their interest. Examining three scenarios including refunding, bundle reservation, and refunding along with bundle reservation policies, this study will investigate the viability and performance of a model for each corresponding scenario. Then, the attempt is to compare two refund and bundle reservation pricing policies in a two-level supply chain including one manufacturer and one wholesaler. Then, a combined model including two products is provided. The demand is constant and also, the population-related information about the division of the population into two types of consumers is available: strategic consumers (consumers able to predict the second-stage discount) and myopic consumers (consumers unable to predict the secondstage discount). In addition, the percentage of consumers who refund the product due to regret, inability to install the product, etc. is constant and independent of the amount of refund. It was found that the combined model was optimal and had a higher profit margin than any other policy alone.