Economic order quantity and quantity discounts under date-terms supplier credit: A discounted cash flow approach

This paper examines economic order quantity and optimal order quantity under both all-units and incremental-quantity discounts when purchase cost, order cost, and carrying cost are all incurred on date-terms supplier credit. Payment dates for the three cost components need not be the same. The traditionally-used periodic-cost minimization methodology which is insensitive to differences in the timing of various within-period cash flows is replaced with a discounted cash flow methodology. Differences in the characteristics of day-terms and date-terms solutions to the quantiy discount case are highlighted.