This research investigates a dual-channel retailer (DCR) operating both a physical store and an online store, where customers can return unwanted products for full refunds. By incorporating the re-salability of returned items into the analysis, this study expands the existing literature on dual-channel retailing. Focusing on the retailer’s strategy of delegating online store operations to a third-party logistics and service provider, we re-explore three contractual strategies: transaction-based fee, fixed-based fee, and gain-sharing. For each strategy, we determine the optimal inventory levels and, where applicable, the optimal fixed-fee. The primary purpose of this study is to compare decision-making outcomes with and without return re-salability, and to analyze how these decisions shift when re-salability is considered, using a combination of analytical and numerical methods. Through analytical analysis, it is found that when the retailer faces high logistical or purchasing costs, an online store may order more in a re-salable system than in a non-re-salable one. This underscores the importance of not assuming that order quantities are always lower in re-salable systems.

@article{mohannadradhi-2025-1706,
  title={Optimizing Dual-Channel Retail Strategies: The Impact of Return Re-Salability on Inventory and Contractual Decisions},
  author={Mohannad  Radhi},
  journal={Operations and Supply Chain Management: An International Journal},
  year={2025},
  volume={18},
  number={4},
  pages={632--646},
  doi={10.31387/oscm0630496}
}

Mohannad  Radhi (2025). Optimizing Dual-Channel Retail Strategies: The Impact of Return Re-Salability on Inventory and Contractual Decisions. Operations and Supply Chain Management: An International Journal, 18(4), 632-646. https://doi.org/10.31387/oscm0630496