Dynamic Pricing with Product Returns: Integrating Optimization Models and Market-Oriented Development Strategies
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Abstract
Dynamic pricing under inventory constraints has traditionally been examined through optimization-based models that emphasize short-term revenue maximization. However, the increasing prevalence of product return mechanisms in contemporary markets introduces additional behavioral and structural complexities that challenge the effectiveness of purely analytical pricing approaches. This integrative review examines dynamic pricing in return-intensive environments by synthesizing insights from operations management, market-oriented development, data-driven demand analysis, and mechanism-oriented system thinking. The study highlights how product returns function as an intermediate structure linking pricing decisions, demand realization, and inventory dynamics, thereby reshaping the feedback mechanisms of pricing systems. By moving beyond static demand assumptions and exogenous return representations, the paper reframes dynamic pricing as a system-guiding intervention that operates indirectly through consumer expectations, return policies, and market perceptions. An integrative conceptual framework is proposed to bridge optimization rigor with strategic and behavioral realism. The review contributes to the literature by emphasizing long-term stability, adaptability, and strategic coherence in pricing system design, and it offers managerial insights for coordinating pricing and return policies in complex and uncertain market environments.
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