Optimal selling quantity and purchasing price for intermediary firms

Intermediary firms are economic agents that purchase from mostly small and numerous independent producers and sell to other firms or to the public. This article investigated how intermediary firms can optimally determine both selling quantity and purchasing price of a product. By incorporating the special structure of intermediary firms’ environments and by modifying the conventional economic order quantity the authors model accordingly, provide optimal decision rules regarding the selling quantity and purchasing price for intermediary firms under profit maximisation.