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Note---Comment on: A Generalized Quantity Discount Pricing Model to Increase Supplier's Profits

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  • S. K. Goyal

    (Department of Decision Sciences and Management Information Systems, Concordia University, Montreal, Quebec H3G 1M8, Canada)

Abstract

Lee and Rosenblatt (Lee, H. L., M. J. Rosenblatt. 1986. A generalized quantity discount pricing model to increase supplier's profits. Management Sci. 32 (9) 1177--1185.) considered the joint problem of ordering and offering discount by a supplier to his sole buyer, the objective of the supplier being to induce the buyer to alter his order quantities in order to increase the supplier's yearly profit. They determined the optimal ordering and pricing policy for the supplier under the constraint on the amount of discount offered to the purchaser. This restriction on the amount of price discount seems unreasonable when the objective of the supplier, in all likelihood, is to increase his own profits. It is possible that higher discounts in purchase price may lead to greater economies for the supplier. In this note, a much simpler approach is being offered for determining the optimal ordering and pricing policy for the supplier.

Suggested Citation

  • S. K. Goyal, 1987. "Note---Comment on: A Generalized Quantity Discount Pricing Model to Increase Supplier's Profits," Management Science, INFORMS, vol. 33(12), pages 1635-1636, December.
    • Handle: RePEc:inm:ormnsc:v:33:y:1987:i:12:p:1635-1636
    DOI: 10.1287/mnsc.33.12.1635
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    Cited by:

    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. U Buscher & G Lindner, 2004. "Ensuring feasibility in ‘a generalized quantity discount pricing model to increase supplier's profits’," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 55(6), pages 667-670, June.
    3. 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.
    4. Mutlu, Fatih & Çetinkaya, Sıla, 2020. "Supplier–carrier–buyer channels: Contractual pricing for a carrier serving a supplier–buyer partnership," International Journal of Production Economics, Elsevier, vol. 230(C).
    5. Sucky, Eric, 2006. "A bargaining model with asymmetric information for a single supplier-single buyer problem," European Journal of Operational Research, Elsevier, vol. 171(2), pages 516-535, June.
    6. Li, Jianli & Liu, Liwen, 2006. "Supply chain coordination with quantity discount policy," International Journal of Production Economics, Elsevier, vol. 101(1), pages 89-98, May.
    7. Awi Federgruen & Chung‐Yee Lee, 1990. "The dynamic lot size model with quantity discount," Naval Research Logistics (NRL), John Wiley & Sons, vol. 37(5), pages 707-713, October.
    8. Noori-Daryan, Mahsa & Taleizadeh, Ata Allah & Jolai, Fariborz, 2019. "Analyzing pricing, promised delivery lead time, supplier-selection, and ordering decisions of a multi-national supply chain under uncertain environment," International Journal of Production Economics, Elsevier, vol. 209(C), pages 236-248.
    9. Bylka, Stanislaw, 2009. "Non-cooperative strategies for production and shipments lot sizing in the vendor-buyer system," International Journal of Production Economics, Elsevier, vol. 118(1), pages 243-252, March.
    10. Waldemar Toporowski, 1999. "Unternehmensübergreifende Optimierung der Bestellpolitik — das JELS-Modell mit einem Intermediär," Schmalenbach Journal of Business Research, Springer, vol. 51(10), pages 963-989, October.
    11. Qiu, Xuan & Lee, Chung-Yee, 2019. "Quantity discount pricing for rail transport in a dry port system," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 563-580.
    12. Chang, Ching-Ter & Chiou, Chei-Chang & Liao, Yi-Shin & Chang, Shu-Chin, 2008. "An exact policy for enhancing buyer-supplier linkage in supply chain system," International Journal of Production Economics, Elsevier, vol. 113(1), pages 470-479, May.
    13. Sarmah, S.P. & Acharya, D. & Goyal, S.K., 2006. "Buyer vendor coordination models in supply chain management," European Journal of Operational Research, Elsevier, vol. 175(1), pages 1-15, November.
    14. Z. Kevin Weng & Richard T. Wong, 1993. "General models for the supplier's all‐unit quantity discount policy," Naval Research Logistics (NRL), John Wiley & Sons, vol. 40(7), pages 971-991, December.

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