IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v144y2013i1p175-179.html
   My bibliography  Save this article

A note on an economic lot size model for price-dependent demand under quantity and freight discounts

Author

Listed:
  • Chang, Hung-Chi

Abstract

In this study, we revisit research contributed by Burwell et al. (1997. International Journal of Production Economics 48, 141–155), where an economic lot size model for price-dependent demand under quantity and freight discounts was proposed. Specifically, for the cases of mixed discounts in which the quantity discounts are either of the incremental or all-units variety and the freight discounts are of the opposite type, we first provide counterexamples to show that adopting the existing algorithm to determine overall optimal lot size and selling price may not achieve the goal of maximizing profit. We then propose an easy to understand computational algorithm to obtain an exact solution.

Suggested Citation

  • Chang, Hung-Chi, 2013. "A note on an economic lot size model for price-dependent demand under quantity and freight discounts," International Journal of Production Economics, Elsevier, vol. 144(1), pages 175-179.
    • Handle: RePEc:eee:proeco:v:144:y:2013:i:1:p:175-179
    DOI: 10.1016/j.ijpe.2013.02.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527313000686
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2013.02.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kim, Young-Joo & Hwang, Hark, 2008. "Incremental discount policy for taxi fare with price-sensitive demand," International Journal of Production Economics, Elsevier, vol. 112(2), pages 895-902, April.
    2. Burwell, Timothy H. & Dave, Dinesh S. & Fitzpatrick, Kathy E. & Roy, Melvin R., 1997. "Economic lot size model for price-dependent demand under quantity and freight discounts," International Journal of Production Economics, Elsevier, vol. 48(2), pages 141-155, January.
    3. Abad, P. L. & Aggarwal, Vijay, 2005. "Incorporating transport cost in the lot size and pricing decisions with downward sloping demand," International Journal of Production Economics, Elsevier, vol. 95(3), pages 297-305, March.
    4. Toptal, Ayşegül, 2012. "Integration of shipment scheduling decisions for forward and reverse channels in a recoverable item system," International Journal of Production Economics, Elsevier, vol. 140(1), pages 129-137.
    5. Swenseth, Scott R. & Godfrey, Michael R., 2002. "Incorporating transportation costs into inventory replenishment decisions," International Journal of Production Economics, Elsevier, vol. 77(2), pages 113-130, May.
    6. Hua, Guowei & Wang, Shouyang & Cheng, T.C.E., 2012. "Optimal pricing and order quantity for the newsvendor problem with free shipping," International Journal of Production Economics, Elsevier, vol. 135(1), pages 162-169.
    7. Toptal, Aysegül, 2009. "Replenishment decisions under an all-units discount schedule and stepwise freight costs," European Journal of Operational Research, Elsevier, vol. 198(2), pages 504-510, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Avinadav, Tal & Herbon, Avi & Spiegel, Uriel, 2014. "Optimal ordering and pricing policy for demand functions that are separable into price and inventory age," International Journal of Production Economics, Elsevier, vol. 155(C), pages 406-417.
    2. Ata Allah Taleizadeh & Bita Hazarkhani & Ilkyeong Moon, 2020. "Joint pricing and inventory decisions with carbon emission considerations, partial backordering and planned discounts," Annals of Operations Research, Springer, vol. 290(1), pages 95-113, July.
    3. Nita H. Shah & Pratik H. Shah & Milan B. Patel, 2021. "Retailer’s inventory decisions with promotional efforts and preservation technology investments when supplier offers quantity discounts," OPSEARCH, Springer;Operational Research Society of India, vol. 58(4), pages 1116-1132, December.
    4. Chandan Mahato & Gour Chandra Mahata, 2023. "Optimal Pricing and Inventory Decisions for Perishable Products with Multivariate Demand Function Under Trade Credit," SN Operations Research Forum, Springer, vol. 4(2), pages 1-26, June.
    5. Andriolo, Alessandro & Battini, Daria & Grubbström, Robert W. & Persona, Alessandro & Sgarbossa, Fabio, 2014. "A century of evolution from Harris׳s basic lot size model: Survey and research agenda," International Journal of Production Economics, Elsevier, vol. 155(C), pages 16-38.
    6. McDonald, Conor M., 2016. "Integrating packaging and supply chain decisions: Selection of economic handling unit quantities," International Journal of Production Economics, Elsevier, vol. 180(C), pages 208-221.
    7. Taleizadeh, Ata Allah & Pentico, David W., 2014. "An Economic Order Quantity model with partial backordering and all-units discount," International Journal of Production Economics, Elsevier, vol. 155(C), pages 172-184.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Engebrethsen, Erna & Dauzère-Pérès, Stéphane, 2019. "Transportation mode selection in inventory models: A literature review," European Journal of Operational Research, Elsevier, vol. 279(1), pages 1-25.
    2. Hua, Guowei & Wang, Shouyang & Cheng, T.C.E., 2012. "Optimal order lot sizing and pricing with free shipping," European Journal of Operational Research, Elsevier, vol. 218(2), pages 435-441.
    3. Andrew Manikas & Michael Godfrey, 2018. "A Spreadsheet Approach For Incorporating Actual Motor Carrier Freight Rates And External Environmental Costs In A Newsvendor Model," International Journal of Management and Marketing Research, The Institute for Business and Finance Research, vol. 11(1), pages 55-72.
    4. Hua, Guowei & Wang, Shouyang & Cheng, T.C.E., 2012. "Optimal pricing and order quantity for the newsvendor problem with free shipping," International Journal of Production Economics, Elsevier, vol. 135(1), pages 162-169.
    5. San-José, Luis A. & García-Laguna, Juan, 2009. "Optimal policy for an inventory system with backlogging and all-units discounts: Application to the composite lot size model," European Journal of Operational Research, Elsevier, vol. 192(3), pages 808-823, February.
    6. Toptal, Aysegül & Bingöl, Safa Onur, 2011. "Transportation pricing of a truckload carrier," European Journal of Operational Research, Elsevier, vol. 214(3), pages 559-567, November.
    7. Meherishi, Lavanya & Narayana, Sushmita A. & Ranjani, K.S., 2021. "Integrated product and packaging decisions with secondary packaging returns and protective packaging management," European Journal of Operational Research, Elsevier, vol. 292(3), pages 930-952.
    8. Adeinat, Hamza & Ventura, José A., 2015. "Determining the retailer's replenishment policy considering multiple capacitated suppliers and price-sensitive demand," European Journal of Operational Research, Elsevier, vol. 247(1), pages 83-92.
    9. van Norden, Linda & van de Velde, Steef, 2005. "Multi-product lot-sizing with a transportation capacity reservation contract," European Journal of Operational Research, Elsevier, vol. 165(1), pages 127-138, August.
    10. Lee, Shine-Der & Fu, Yen-Chen, 2014. "Joint production and delivery lot sizing for a make-to-order producer–buyer supply chain with transportation cost," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 66(C), pages 23-35.
    11. Michael Godfrey & Andrew Manikas, 2012. "Teaching Supply Chain Management Students About Using Actual Motor Carrier Freight Rates In Purchase Lotsizing Models," Business Education and Accreditation, The Institute for Business and Finance Research, vol. 4(2), pages 49-59.
    12. Abad, P. L. & Aggarwal, Vijay, 2005. "Incorporating transport cost in the lot size and pricing decisions with downward sloping demand," International Journal of Production Economics, Elsevier, vol. 95(3), pages 297-305, March.
    13. Andriolo, Alessandro & Battini, Daria & Grubbström, Robert W. & Persona, Alessandro & Sgarbossa, Fabio, 2014. "A century of evolution from Harris׳s basic lot size model: Survey and research agenda," International Journal of Production Economics, Elsevier, vol. 155(C), pages 16-38.
    14. Toptal, Ayşegül, 2012. "Integration of shipment scheduling decisions for forward and reverse channels in a recoverable item system," International Journal of Production Economics, Elsevier, vol. 140(1), pages 129-137.
    15. Ertogral, Kadir, 2008. "Multi-item single source ordering problem with transportation cost: A Lagrangian decomposition approach," European Journal of Operational Research, Elsevier, vol. 191(1), pages 156-165, November.
    16. Lee, Y.C.E. & Chan, Chi Kin & Langevin, A. & Lee, H.W.J., 2016. "Integrated inventory-transportation model by synchronizing delivery and production cycles," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 91(C), pages 68-89.
    17. Hill, James & Galbreth, Michael, 2008. "A heuristic for single-warehouse multiretailer supply chains with all-unit transportation cost discounts," European Journal of Operational Research, Elsevier, vol. 187(2), pages 473-482, June.
    18. Ertogral, K. & Darwish, M. & Ben-Daya, M., 2007. "Production and shipment lot sizing in a vendor-buyer supply chain with transportation cost," European Journal of Operational Research, Elsevier, vol. 176(3), pages 1592-1606, February.
    19. Ouyang, Liang-Yuh & Ho, Chia-Huei & Su, Chia-Hsien, 2008. "Optimal strategy for an integrated system with variable production rate when the freight rate and trade credit are both linked to the order quantity," International Journal of Production Economics, Elsevier, vol. 115(1), pages 151-162, September.
    20. Rieksts, Brian Q. & Ventura, Jose A., 2008. "Optimal inventory policies with two modes of freight transportation," European Journal of Operational Research, Elsevier, vol. 186(2), pages 576-585, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:144:y:2013:i:1:p:175-179. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.