Week 7 Lab: Returns Cost Model

Build a small return-cost model for a product category, and work out where a "keep-it" refund would actually make sense

5 April 2027

Before the lab#

Pick a product category from Monday’s lecture (apparel, footwear, electronics, beauty, jewelry) — your own week 1 package’s category is fine if it fits one of these.

In the lab#

• Estimate the returns — as an illustrative exercise, not a real sales figure, assume a stated hypothetical monthly order volume for your chosen category (pick a round number and label it as invented). Apply that category’s return rate from Monday’s lecture to estimate a monthly number of returns.
• Price the round trip — using Monday’s reverse-logistics cost range, or your own clearly-labelled illustrative estimate if your category isn’t electronics, estimate the cost of processing those returns.
• Decide the “keep-it” threshold — compare that per-item processing cost against a stated (illustrative) retail value for your product. If the processing cost is close to or above the item’s value, would a “keep-it” refund make sense here? Say why or why not.
• Trace it back to packaging — name one packaging or fulfilment decision (box size, insert design, return-label placement) that would shift your product’s actual return rate, and identify which other cost from earlier weeks (week 4’s freight formula, week 2’s material cost) it would trade against.

Afterwards#

Keep your model. Week 11’s redesign studio asks you to hold this constraint — returns economics — alongside five others at once.