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Joint Inventory Replenishments with Group Discounts Based on Invoice Value

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  • Amiya K. Chakravarty

    (School of Business Administration, University of Wisconsin, Milwaukee, Wisconsin 53201)

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    Abstract

    The study focuses attention on a grouping procedure for the purpose of joint inventory replenishments from a single supplier. The grouping procedure exploits the group discounts available on the total purchase value of a group of index and the economies of scale of order placing costs. In particular it is shown that the optimal groups are formed such that the annual (dollar) usage values of the items do not decrease (may increase or stay the same), from the first to the last group. This is similar in concept to the well-known ABC classification of inventory items. The grouping problem is modeled as a "shortest-path" using the above property.

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    File URL: http://dx.doi.org/10.1287/mnsc.30.9.1105
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 30 (1984)
    Issue (Month): 9 (September)
    Pages: 1105-1112

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    Handle: RePEc:inm:ormnsc:v:30:y:1984:i:9:p:1105-1112

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    Related research

    Keywords: inventory models; joint replenishment; group discounts;

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    Cited by:
    1. Flapper, Simme Douwe P. & González-Velarde, José Luis & Smith, Neale R. & Escobar-Saldívar, Luis Jacob, 2010. "On the optimal product assortment: Comparing product and customer based strategies," International Journal of Production Economics, Elsevier, vol. 125(1), pages 167-172, May.
    2. Benton, W. C. & Park, Seungwook, 1996. "A classification of literature on determining the lot size under quantity discounts," European Journal of Operational Research, Elsevier, vol. 92(2), pages 219-238, July.
    3. Ke, Ginger Y. & Bookbinder, James H., 2012. "Discount pricing for a family of items: The supplier's optimal decisions," International Journal of Production Economics, Elsevier, vol. 135(1), pages 255-264.
    4. Rizk, Nafee & Martel, Alain & Ramudhin, Amar, 2006. "A Lagrangean relaxation algorithm for multi-item lot-sizing problems with joint piecewise linear resource costs," International Journal of Production Economics, Elsevier, vol. 102(2), pages 344-357, August.

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