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An Alternative Criterion for the Quantity Discount Decision
Author(s) -
Markowski Carol A.,
Markowski Edward P.
Publication year - 1988
Publication title -
journal of purchasing and materials management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.75
H-Index - 92
eISSN - 1745-493X
pISSN - 0094-8594
DOI - 10.1111/j.1745-493x.1988.tb00202.x
Subject(s) - purchasing , order (exchange) , scheme (mathematics) , purchasing decision , process (computing) , decision process , operations research , computer science , business , microeconomics , operations management , economics , marketing , mathematics , finance , process management , mathematical analysis , operating system
The usual approach to purchase quantity determination is to consider the purchase cost, the order cost, and the holding cost equally in making the decision about accepting a quantity discount. Although there are various methods for approximating order costs, there is uncertainty regarding the correct approach for measurement. This article emphasizes the purchasing and holding cost components of the decision. In the process, its proposes a classification scheme that can be used for any potential discounts, placing them into one of four categories which are progressively more attractive to the purchaser.