An inventory model with random discount offerings

M. Mahdi Tajbakhsh, Chi-Guhn Lee and Saeed Zolfaghari

Omega, 2011, vol. 39, issue 6, 710-718

Abstract: We consider an inventory model in which a supplier makes deal offers with random discount prices at random points in time. Assuming that discount offerings follow a Poisson process and discount price is a discrete random variable with a known distribution, we propose a continuous-review control policy for the model and derive optimality conditions for the policy parameters. The model is then extended to the case of multiple suppliers that offer discount deals with supplier-specific Poisson processes and discount prices. Numerical examples are presented to demonstrate cost savings due to discount offers.

Keywords: Inventory; management; Price; discount; Stochastic; price; Multiple; suppliers (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (5)

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