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Jointly constrained order quantities with all‐units discounts

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  • Paul A. Rubin
  • W. C. Benton

Abstract

In this article we investigate situations where the buyer is offered discounted price schedules from alternative vendors. Given various discount schedules, the buyer must make the best buying decision under a variety of constraints, such as limited storage space and restricted inventory budgets. Solutions to this problem can be utilized by the buyer to improve profitability. EOQ models for multiple products with all‐units discounts are readily solvable in the absence of constraints spanning the products. However, constrained discounted EOQ models lack convenient mathematical properties. Relaxing the product‐spanning constraints produces a dual problem that is separable, but lack of convexity and smoothness opens the door for duality gaps. In this research we present a set of algorithms that collectively find the optimal order vector. Finally, we present numerical examples using actual data. to illustrate the application of the algorithms. © 1993 John Wiley & Sons, Inc.

Suggested Citation

  • Paul A. Rubin & W. C. Benton, 1993. "Jointly constrained order quantities with all‐units discounts," Naval Research Logistics (NRL), John Wiley & Sons, vol. 40(2), pages 255-278, March.
    • Handle: RePEc:wly:navres:v:40:y:1993:i:2:p:255-278
    DOI: 10.1002/1520-6750(199303)40:23.0.CO;2-G
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    References listed on IDEAS

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    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. 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.
    3. repec:inm:ormnsc:v:30:y:1984:i:12:p:1524-1539(2 is not listed on IDEAS
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    Cited by:

    1. Jackson, Jonathan E. & Munson, Charles L., 2019. "Common replenishment cycle order policies for multiple products with capacity expansion opportunities and quantity discounts," International Journal of Production Economics, Elsevier, vol. 218(C), pages 170-184.

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