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Determination of suppliers' optimal quantity discount schedules with heterogeneous buyers
Author(s) -
Wang Qinan
Publication year - 2002
Publication title -
naval research logistics (nrl)
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.665
H-Index - 68
eISSN - 1520-6750
pISSN - 0894-069X
DOI - 10.1002/nav.1052
Subject(s) - schedule , computer science , operations research , linear programming , microeconomics , economics , mathematics , algorithm , operating system
Although the quantity discount problem has been extensively studied in the realm of a single supplier and a single buyer, it is not well understood when a supplier has many different buyers. This paper presents an analysis of a supplier's quantity discount decision when there are many buyers with different demand and cost structures. A common discrete all‐unit quantity discount schedule with many break points is used. After formulating the model, we first analyze buyers' responses to a general discrete quantity discount schedule. This analysis establishes a framework for a supplier to formulate his quantity discount decision. Under this framework, the supplier's optimal quantity discount schedule can be formulated and solved by a simple non‐linear programming model. The applicability of the model is discussed with an application for a large U.S. distribution network. © 2002 John Wiley & Sons, Inc. Naval Research Logistics, 49: 46–59, 2002; DOI 10.1002/nav.1052