Penalty and threshold optimisation of the retailer - vendor return contracts for contract re-negotiation in retail reverse supply chains

In this paper, we consider a decentralised reverse supply chain constituting of multiple vendors and an independent retailer. The vendors offer the retailer return contracts with a multi-layered penalty structure deal. We focus on the strategic decision of developing optimal vendor re-negotiation contract parameters for the retailer. We model the problem as a mixed integer nonlinear program (MINLP) where the retailer decides on the vendor …