Coordinated Lot-Sizing and Dynamic Pricing under a Supplier All-Units Quantity Discount

BuR Business Research Journal, Vol. 1, No. 1, May 2008

18 Pages Posted: 21 Jan 2009

See all articles by Sandra Transchel

Sandra Transchel

affiliation not provided to SSRN

Stefan Minner

affiliation not provided to SSRN

Date Written: January 20, 2009

Abstract

We consider an economic order quantity model where the supplier offers an all-units quantity discount and a price sensitive customer demand. We compare a decentralized decision framework where selling price and replenishment policy are determined independently to simultaneous decision making. Constant and dynamic pricing are distinguished. We derive structural properties and develop algorithms that determine the optimal pricing and replenishment policy and show how quantity discounts not only influence the purchasing strategy but also the pricing policy. A sensitivity analysis indicates the impact of the fixed-holding cost ratio, the discount policy, and the customers' price sensitivity on the optimal decisions.

Keywords: Dynamic Pricing, Economic Order Quantity, Quantity-Discount, Procurement-Inventory Policies, Marketing-Operations Interface

Suggested Citation

Transchel, Sandra and Minner, Stefan, Coordinated Lot-Sizing and Dynamic Pricing under a Supplier All-Units Quantity Discount (January 20, 2009). BuR Business Research Journal, Vol. 1, No. 1, May 2008, Available at SSRN: https://ssrn.com/abstract=1330432

Sandra Transchel (Contact Author)

affiliation not provided to SSRN ( email )

Stefan Minner

affiliation not provided to SSRN

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