1. Introduction
Supply chains are undergoing radical transformations due to the mega-competition taking place on a global scale
(Ravi and Shankar, 2005). Firms are finding that they must deal with a high level of uncertainty, which is not only
technical in nature. It has been observed by companies that there is an increase in the flow of returns of the product
due to product recalls, warranty returns, service returns, end-of-use returns, end-of-life returns, and so on (Ravi and
Shankar, 2005). Overall, the value of returns is estimated to be around $43 billion per year, representing an average
of 15%-20% of all goods sold (Genchev, 2009). With continuing pressures to reduce operating costs while often
incurring additional costs brought about by environmental restrictions, firms must be concerned with the costs of
returning materials associated with the products that they deliver