EOQ and price break analysis in a JIT environment

Most manufacturers rarely use formal price break (quantity discount) analysis when placing purchase orders; and, too often, discounts are totally ignored because of programmed lot-sizing rules in an MRP II system. This article presents the issue of price breaks, how it deals with it in the JIT environment, how the paper changed policy, the program written to analyze the opportunities, and the implementation results of the new policy and program. During the last two years, asking for and taking advantage of price breaks has saved the present company several hundred thousand dollars.