A new location-inventory policy with reverse logistics applied to B2C e-markets of China

Based on the characteristics of consumer purchasing behavior over business-to-consumer (132C) electronic markets in China, we consider a supply chain with one supplier, one B2C firm and multiple distribution centers (DCs) to jointly study supply chain location and inventory policies when product returns are allowed for. A new location-inventory policy is proposed and modeled as a bi-level programming problem: The upper level determines appropriate locations of third checking sites (3CS), and the lower level presents a coordinated inventory replenishment QS _R policy in light of the 3CS locations. An abstract network based on a B2C firm in China is adopted to illustrate the proposed model. We find that a QS _R policy is more effective on inventory control than the independent control policy is; 3CS added into the network improves the B2C firm's profit., and sensitivity analysis provides interesting managerial insights into the B2C firm's profit improvement in China. (C) 2006 Elsevier B.V. All rights reserved.