Coordinated Lot-sizing and Dynamic Prizing under a Supplier All-units Quantity Discount
AbstractWe 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.
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Bibliographic InfoArticle provided by German Academic Association for Business Research in its journal BuR - Business Research.
Volume (Year): 1 (2008)
Issue (Month): 1 (May)
dynamic pricing; economic order quantity; quantity-discount; procurement-inventory policies; marketing-operations interface;
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- Fleischmann, M. & Hall, J.M. & Pyke, D.F., 2003. "Smart Pricing: Linking Pricing Decisions with Operational Insights," Research Paper ERS-2004-001-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
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