Packaged goods manufacturers spend in excess of $75 billion annually on trade promotions, even though their effectiveness has been hotly debated by academics and practitioners for decades. One reason for this ongoing debate is that empirical research has been limited mostly to case studies,...

When a firm allows the return of previously purchased merchandise, it provides customers with an option that has measurable value. Whereas the option to return merchandise leads to an increase in gross revenue, it also creates additional costs. Selecting an optimal return policy requires...