General models for the supplier’s all-unit quantity discount policy

The purpose of this article is to investigate some managerial insights related to using the all-unit quantity discount policies under various conditions. The models developed here are general treatments that deal with four major issues: (a) one buyer or multiple buyers, (b) constant or price-elastic demand, (c) the relationship between the supplier’s production schedule or ordering policy and the buyers’ ordering sizes, and (d) the supplier either pruchasing or manufacturing the item. The models are developed with two objectives: the supplier’s profit improvement or the supplier’s increased profit share analysis. Algorithms are developed to find optimal decision policies. The present analysis provides the supplier with both the optimal all-unit quantity discount policy and the optimal production (or ordering) strategy. Numerical examples are provided.