The influence of different quantity discounts on integrated supplier-retailer inventory model

Yu-Jen Lin and Shwu-Huey Lin

International Journal of Industrial and Systems Engineering, 2018, vol. 30, issue 3, 329-345

Abstract: This paper investigates an integrated inventory model with defective items where the supplier will offer different quantity discounts to the retailer by different defective rate. We consider the supplier has to offer all-units quantity discount to retailer, as the retailer inspects the receiving items are too highly defective rate. Otherwise, the supplier offers price-break quantities discount to the retailer. Our objective is to determine the optimal order quantity of the retailer and the optimal number of shipment per production run from the supplier to the retailer, so that the joint total profit has a maximum value. An algorithm is developed to find the optimal solution. Two examples are provided to illustrate the theoretical results, and the management insight is presented to demonstrate from the numerical examples.

Keywords: integrated inventory system; quantity discount; defective items. (search for similar items in EconPapers)
Date: 2018
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