Abstract: Based on the phenomenon of false failure returns at online sales, the optimal ordering coordination issue for perishable product is studied in this paper. A two-period dynamic programming is employed to depict the two-ordering behavior of the online retailer. The centralized-and decentralized-decision models are respectively developed under the assumption that the false failure returns happen in each period, and a price protection contract is proposed to realize the supply chain coordination. Finally, numerical examples are presented to illustrate the model and some management insights are put forward as well. From the research of the model, the following can be obtained: (1) the online retailer needs to order more products in the first period in response to the demand risk when the demand variability increases, which leads to a lower profit of the system. Moreover, coordination is more valuable when demand variability is higher. (2) As either the return rate of the first period increases or the return rate of the second period increases, or do both, the first-period and second-period order quantities will decrease. (3) A smaller customer return or a larger serviceable return rate is more valuable for the channel when demand variability is higher.

Key words: supply chain, ordering, perishable product, false failure returns