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A Supplier's Optimal Quantity Discount Policy Under Asymmetric Information

Author

Listed:
  • Charles J. Corbett

    () (The Anderson School at UCLA, 110 Westwood Plaza, Box 951481, Los Angeles, California 90095-1481)

  • Xavier de Groote

    (INSEAD, Fontainebleau, France)

Abstract

In the supply-chain literature, an increasing body of work studies how suppliers can use incentive schemes such as quantity discounts to influence buyers' ordering behaviour, thus reducing the supplier's (and the total supply chain's) costs. Various functional forms for such incentive schemes have been proposed, but a critical assumption always made is that the supplier has full information about the buyer's cost structure. We derive the optimal quantity discount policy under asymmetric information and compare it to the situation where the supplier has full information.

Suggested Citation

  • Charles J. Corbett & Xavier de Groote, 2000. "A Supplier's Optimal Quantity Discount Policy Under Asymmetric Information," Management Science, INFORMS, vol. 46(3), pages 444-450, March.
  • Handle: RePEc:inm:ormnsc:v:46:y:2000:i:3:p:444-450
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    File URL: http://dx.doi.org/10.1287/mnsc.46.3.444.12065
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    References listed on IDEAS

    as
    1. James P. Monahan, 1984. "A Quantity Discount Pricing Model to Increase Vendor Profits," Management Science, INFORMS, vol. 30(6), pages 720-726, June.
    2. Goyal, Suresh K. & Gupta, Yash P., 1989. "Integrated inventory models: The buyer-vendor coordination," European Journal of Operational Research, Elsevier, vol. 41(3), pages 261-269, August.
    3. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, March.
    4. Z. Kevin Weng, 1995. "Channel Coordination and Quantity Discounts," Management Science, INFORMS, vol. 41(9), pages 1509-1522, September.
    5. Hau L. Lee & Meir J. Rosenblatt, 1986. "A Generalized Quantity Discount Pricing Model to Increase Supplier's Profits," Management Science, INFORMS, vol. 32(9), pages 1177-1185, September.
    6. repec:inm:ormnsc:v:30:y:1984:i:12:p:1524-1539(2 is not listed on IDEAS
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