Browsing by Author "Karabag, Oktay"

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Citation - WoS: 7
Citation - Scopus: 6
Customer-To Returns Logistics: Can It Mitigate the Negative Impact of Online Returns?
(Elsevier Ltd, 2024) Eruguz A.S.; Karabağ O.; Tetteroo E.; van Heijst C.; van den Heuvel W.; Dekker R.; van den Heuvel, Wilco; Dekker, Rommert; van Heijst, Carl; Tetteroo, Eline; Karabag, Oktay; Eruguz, Ayse Sena
Customer returns are a major problem for online retailers due to their economic and environmental impact. This paper investigates a new concept for handling online returns: customer-to-customer (C2C) returns logistics. The idea behind the C2C concept is to deliver returned items directly to the next customer, bypassing the retailer's warehouse. To incentivize customers to purchase C2C return items, retailers can promote return items on their webshop with a discount. We build the mathematical models behind the C2C concept to determine how much discount to offer to ensure enough customers are induced to purchase C2C return items and to maximize the retailer's expected total profit. Our first model, the base model (BM), is a customer-based formulation of the problem and provides an easy-to-implement constant-discount-level policy. Our second model formulates the real-world problem as a Markov decision process (MDP). Since our MDP suffers from the curse of dimensionality, we resort to simulation optimization (SO) and reinforcement learning (RL) methods to obtain reasonably good solutions. We apply our methods to data collected from a Dutch fashion retailer. We also provide extensive numerical experiments to claim generality. Our results indicate that the constant-discount-level policy obtained with the BM performs well in terms of expected profit compared to SO and RL. With the C2C concept, significant benefits can be achieved in terms of both expected profit and return rate. Even in cases where the cost-effectiveness of the C2C returns program is not pronounced, the proportion of customer-to-warehouse returns to total demand becomes lower. Therefore, the system can be defined as more environmentally friendly. The C2C concept can help retailers financially address the problem of online returns and meet the growing need for reducing their environmental impact. © 2024 The Authors
Optimal Purchasing and Production Control for a Circular Production System
(Taylor & Francis Inc, 2026) Song, Yun-Lei; Frigerio, Nicla; Karabag, Oktay; Wang, Jun-Qiang; Tan, Baris
The paper investigates the optimal purchasing and production control policy within a circular production system that processes two returned material types through a shared manufacturing center. Materials are purchased or rejected upon arrival, with differences in procurement cost. At each decision epoch, the system must decide whether to purchase incoming materials and which type to prioritize for production. The problem is formulated as a Markov decision process, and a linear programming approach is developed to compute the optimal purchasing and production policy for the system under both non-preemption and preemption rules. Theoretically, the structure of the optimal policy is analytically characterized under the preemption rule in the case of equal production rates. Numerical experiments reveal that this policy remains optimal or near-optimal for the system under non-preemption and preemption rules with varying production rates. Additionally, comparisons of the optimal policies between non-preemption and preemption rules demonstrate that the system under the preemption rule yields higher average reward than that under the non-preemption rule, to varying degrees depending on system parameters, such as production rate, holding cost, and arrival rate.