Optimal Ordering and Advertisement Policies for a Two-Warehouse Inventory System with Advance Sales and Product Return Guarantee.

In the real market, competition is becoming more intense. Companies must create customer value. They must also clearly and persuasively communicate that value to target customers. In practice, advertisement plays a key role in stimulating demand. This research incorporates the frequency of advertisement into the demand function. In order to develop and maintain a competitive advantage, the retailer offers an appreciation period in which customers can ask to return products for any reason. In addition, by providing advance sales, retailers extend the sales period and increase market share. In this article, we provide optimal ordering and advertisement policies for a two-warehouse inventory system with advance sales and product return guarantee. We first establish a proper model and then provide an easy-to-use method to obtain optimal ordering and advertisement policies for the retailer to achieve maximum total profit. Finally, numerical examples are given to illustrate the solution procedure, followed by a sensitivity analysis that examines the effect on the optimal solution of changes in the values of certain parameters. [ABSTRACT FROM AUTHOR]