Worst-case performance of a power-of-two policy for the quantity discount model

Worst-case performance of a power-of-two policy for the quantity discount model

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Article ID: iaor19951229
Country: United Kingdom
Volume: 45
Issue: 10
Start Page Number: 1206
End Page Number: 1210
Publication Date: Oct 1994
Journal: Journal of the Operational Research Society
Authors: ,
Keywords: quantity discount
Abstract:

This paper derives the worst-case performance of a power-of-two policy in an all-unit quantity discount model with one price break point, which extends the sensitivity analysis for the classical EOQ model. It shows that the worst-case performance will depend on the discount rate α, and is within 7.66% of optimality when α<7.51%, and approximately within 100α% of optimality when α≥7.51%.

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