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Optimal ordering for a probabilistic one-time discount

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  • Shaposhnik, Yaron
  • Herer, Yale T.
  • Naseraldin, Hussein

Abstract

We develop a model for a one-time special purchasing opportunity where there is uncertainty with respect to the materialization of the discounted purchasing offer. Our model captures the phenomenon of an anticipated future event that may or may not lead to a discounted offer. We analyze the model and show that the optimal solution results from a tradeoff between preparing for the special offer and staying with the regular ordering policy. We quantify the tradeoff and find that the optimal solution is one of four intuitive policies. We present numerical illustrations that provide additional insights on the relationship between the different ordering policies.

Suggested Citation

  • Shaposhnik, Yaron & Herer, Yale T. & Naseraldin, Hussein, 2015. "Optimal ordering for a probabilistic one-time discount," European Journal of Operational Research, Elsevier, vol. 244(3), pages 803-814.
    • Handle: RePEc:eee:ejores:v:244:y:2015:i:3:p:803-814
    DOI: 10.1016/j.ejor.2015.02.020
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    Cited by:

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    2. Yusen Xia, 2016. "Responding to supplier temporary price discounts in a supply chain through ordering and pricing decisions," International Journal of Production Research, Taylor & Francis Journals, vol. 54(7), pages 1938-1950, April.
    3. Yiju Wang & Donglei Du & Jingfu Huang, 2021. "Optimal Replenishment Strategy for Inventory Mechanism with Step-Shaped Demand," Journal of Optimization Theory and Applications, Springer, vol. 190(3), pages 841-860, September.

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