Sharing the savings associated with quantity discount using satisfaction functions

The problem of the quantity discount to encourage ordering in quantities greater than the economic order quantity has led to various formulations. Some of these formulations result in non Pareto optimal solutions, and none of them explicitly incorporates the buyer's and seller's preferences. Moreover, the problem of sharing the savings by the buyer and seller has been barely looked at. The formulation proposed in this paper aims at dealing with the issue of sharing between the buyer and seller by explicitly taking into consideration their respective preferences, expressed through the use of satisfaction functions.