Purchase quantity discounts and open order rescheduling in an assemble-to-order environment: The hidden economic tradeoffs

In manufacturing systems, raw materials and components are purchased from outside suppliers. The purchasing decision consists of quantity and timing decisions. An added dimension to the purchasing decision is the availability of purchase quantity discounts. At the same time, order rescheduling is aimed at revising due dates of orders such that the planned schedule matches the actual schedule over time. Such revisions in quantity and timing affect the purchase decision. In this study, the impact of order rescheduling on various purchase quantity discount lot size models is evaluated under different operating environments. The findings of this research provide evidence for implementing dynamic purchase quantity discount lot sizing procedures when order rescheduling is incorporated into manufacturing systems.