Coordinated Lot-sizing and Dynamic Pricing under a Supplier All-units Quantity Discount

Sandra Transchel, Stefan Mirner

Research output: Contribution to journalArticlepeer-review

19 Scopus citations

Abstract

We consider an economic order quantity model where the supplier offers an all-units quantity discount and a price sensitive customer demand. We compare a decentralized decision framework where selling price and replenishment policy are determined independently to simultaneous decision making. Constant and dynamic pricing are distinguished. We derive structural properties and develop algorithms that determine the optimal pricing and replenishment policy and show how quantity discounts not only influence the purchasing strategy but also the pricing policy. A sensitivity analysis indicates the impact of the fixed-holding cost ratio, the discount policy, and the customers’ price sensitivity on the optimal decisions.

Original languageEnglish
Pages (from-to)125-141
Number of pages17
JournalBusiness Research
Volume1
Issue number1
DOIs
StatePublished - 1 May 2008
Externally publishedYes

Keywords

  • Dynamic Pricing
  • Economic Order Quantity
  • Marketing-Operations Interfac
  • Procurement-Inventory Policies
  • Quantity-Discount

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