A deposit-refund system for managing the economical circulation of returnable transport items

Abstract

While the use of Returnable Transport Items (RTI) is a common practice in supply chains committed to sustainability. An efficient RTI circulation mechanism must be implemented to ensure the profitability of the approach. Within this context, this paper presents a deposit-refund system (DRS) designed for RTI circulation to maximize supply chain profitability. The profit optimization analysis considered three scenarios: the vendor's profit, there tailer's profit, and the overall system profit. Tailored solution strategies are developed for each case, considering retail price components, and leading to the identification of the optimal deposit amount required to maximize RTI circulation. We further examinehow the retail price affects the profits of supply chain actors relative to the RTI return rate and studystudy how changes in return rates influence the profit patterns of supply chain actors. The results are scrutinized via several sensitivity analyses, leading to important implications for the design of deposit-refund systems for RTI. We for example find that the vendor's wholesale price has a significant effect in establishing the decision-maker's optimal policy in designing a DRS for RTI circulation. In other words, the wholesale price is a key component in assessing the economic viability and determining the deposit amount for RTI. Moreover, through a couple of hypothetical, butrealistic cases of RTI applications considering specific parameter settings, we shown that the vendor's position can be either significant or insignificant dependong on the difference between the value of the RTI and that of the goods it holds.