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Economic Inventory/Transport Lot, Sizing with Quantity and Freight Rate Discounts
Author(s) -
Tersine Richard J.,
Barman Samir
Publication year - 1991
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1991.tb01914.x
Subject(s) - sizing , economic order quantity , dual (grammatical number) , order (exchange) , business , industrial organization , inventory management , operations research , microeconomics , operations management , economics , marketing , supply chain , mathematics , finance , art , literature , visual arts
Discounts are a primary marketing mechanism for inducing customers to increase the size of their purchases. Quantity discounts from suppliers and freight discounts from shippers are commonly encountered by organizations. This paper structures quantity and freight discounts into the order size decision in a deterministic economic order quantity system. Optimum lot‐sizing algorithms are derived for the dual discount situations of all‐units or incremental quantity discounts and all‐weight or incremental freight discounts.