Effects of discount policies on economic order quantity and total cost for perishables: a case study

Didem Guleryuz and Sakir Esnaf

International Journal of Data Science, 2021, vol. 6, issue 2, 172-187

Abstract: The classical economic order quantity (EOQ) model assumes that demand stays constant over time. This study examined the effect of changes in the economic order quantities resulting from discount policies in perishable goods on total cost, making a discount suggestion. Discounts due to shelf life and additional perishing costs were added to the EOQ formula via the Weiss Model to calculate the order quantity of play dough. Then the total cost is determined, and both costs were compared by trying different discount rates. As a result, the total cost for classical order quantity and order quantities, including discount policies, are calculated as 634.43 TRY, 641.32 TRY, and 1672.695 TRY, 1732.830 TRY for decorative and standard play doughs, respectively. Although the classic model has a lower cost as it does not consider the discount policy or the perishing rates, this is not suitable for perishables in real life.

Keywords: economic order quantity model; perishables; Weiss model; total cost; discount rate; revenue management; inventory management; dynamic pricing. (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijdsci:v:6:y:2021:i:2:p:172-187

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