Return modeling

Return policies enable you to define how returned items are handled so that you can incorporate reverse logistical flows into models. For example, an item, either defective or otherwise, may be returned back to its origin. Return Policies allow you to differentiate returns from normal supply chain activity, including the costs associated with the return.

Returns originate at customer locations. The return policy you select determines how allocation to the destination will be handled - single and multiple destinations are supported. For multiple destinations, you can specify the ratio handled by each destination or let the solver determine the ratio.

The Return Product Ratios table enables you to determine which product should be returned, the rate at which returns occur based on the product received, and the amount of returned product. The amount returned depends on the Return Basis. The Return Product can be the same or different than the Product Name (the received product).

When defining the return processes, be sure to populate the received product in the Product column Return Process Assignments table. Do not use the return product or you will see no Return Process Flows.

A returns model can be single period if you are just tracking the movement of products back to the destination. However, if you plan to reuse the returned products, the model must then be multi-period because the returned products cannot be used to fulfill demand more than once in the same period.

The following are examples of how to populate the Return Product Ratios table:

Case 1: Standard return rate of received product

In this case, there is a known rate of return for a specific product – 2.5% of all product received per shipment is returned:

Case 2: Return of packaging material

Each finished good is shipped with 4 frames that are returned to the manufacturer:

Case 3: Return of damaged product

Damaged goods are tracked as a unique return product: