Jointly constrained order quantities with all-units discounts

Jointly constrained order quantities with all-units discounts

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Article ID: iaor19931695
Country: United States
Volume: 40
Issue: 2
Start Page Number: 255
End Page Number: 278
Publication Date: Mar 1993
Journal: Naval Research Logistics
Authors: ,
Keywords: discounts
Abstract:

In this article the authors investigate situations where the buyer is offered discounted price schedules from alternative vendors. Given various discount schedules, the buyer must make the best buying decision under a variety of constraints, such as limited storage space and restricted inventory budgets. Solutions to this problem can be utilized by the buyer to improve profitability. EOQ models for multiple products with all-units discounts are readily solvable in the absence of constraints spanning the products. However, constrained discounted EOQ models lack convenient mathematical properties. Relaxing the product-spanning constraints produces a dual problem that is separable, but lack of convexity and smoothness opens the door for duality gaps. In this research the authors present a set of algorithms that collectively find the optimal order vector. Finally, they present numerical examples using actual data, to illustrate the application of the algorithms.

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