I have set up receipt in 3 steps, as described in the documentation. The docs describe how to accept purchased product into inventory, but not how to reject and return product. This is all it says:
Of course, you may change the quantity and only transfer to stock the quantity that is valid and decide that you will return the quantity that is not good.
I believe the process should work like this:
Process the receipt (move from Partner Locations/Vendors to WH/Input
Transfer the product to the quality zone (move from WH/Input to WH/Quality Control)
Return product to vendor (move from WH/Quality Control to Partner Locations/Vendors)
Create a Refund Invoice (like in Vendor Bills)
I tried the Return button on the delivery order (Reverse button in v9), but, it only allows me to return the product to WH/Input. Checking the To Refund box seems to have no effect.
It was suggested in another post, that a refund could be created from the delivery order, but I see no way to do that, and it doesn't happen automatically.
Return button on Delivery Order:
Return Location list and To Refund checkbox on reverse transfer: