Inventory control with product returns: the impact of (mis)information

Product returns are often characterized by a dual uncertainty on time and quantity. In the literature on inventory management with product returns, best forecasts have been associated with methods that use the most informationregarding product return history. In practice however, data is often scarce and unreliable. In this paper we investigate the impact of (mis)information on inventory performance. An exact analysis shows that in case of misestimation the most informed method does not necessarily lead to best performance. Further we provide an extensive simulation study to investigate the impact of misinformation w.r.t. inventory costs.This has relevant implications regarding the investments to make on product return information systems.