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

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.