Evaluating jointly constrained order quantity complexities for incremental discounts

Evaluating jointly constrained order quantity complexities for incremental discounts

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Article ID: iaor20042955
Country: Netherlands
Volume: 149
Issue: 3
Start Page Number: 557
End Page Number: 570
Publication Date: Sep 2003
Journal: European Journal of Operational Research
Authors: ,
Keywords: programming: nonlinear
Abstract:

In this paper we consider the purchasing decisions facing a buying firm which receives incrementally discounted price schedules for a group of items in the presence of constraints such as budgets and space limitations. The constraints take the form of upper bounds on positively weighted linear combinations of order size, dollar volume, unit price and order frequency. We adapt the solution procedures from an earlier paper to treat this case. The results show that simultaneous order quantities for multiple items, offered with separate incremental discounts and subject to joint resource constraints, can be calculated efficiently using a combination of Lagrangean relaxation and, as needed, partial emuneration. This problem proved to be no more tractable than its counterpart with all units discounts.

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