Publication: Optimal quantity discount design with limited information sharing
Program
KU-Authors
KU Authors
Co-Authors
Kouvelis, Panos
Publication Date
Language
Type
Embargo Status
Journal Title
Journal ISSN
Volume Title
Alternative Title
Abstract
In this article we address the optimal quantity discount design problem of a supplier in a two-stage supply chain where the supplier and the buyer share annual demand information only. The supply chain faces a constant deterministic demand that is not price sensitive and operates with fixed setup costs in both stages. We show that the supplier can actually moderate a cost-minimizing buyer to order in quantities different than the buyer's optimal order quantity in the traditional setting and develop a multi-breakpoint quantity discount scheme that maximizes supplier's expected net savings. The proposed multi-breakpoint discount scheme can be easily computed from the available information and, while also maximizing the supplier's net savings, is very effective in achieving high levels of supply chain coordination efficiency in the presence of limited information.
Source
Publisher
Wiley
Subject
Management
Citation
Has Part
Source
Decision Sciences
Book Series Title
Edition
DOI
10.1111/j.1540-5915.2008.00212.x