An improved procedure for economic order quantity with all - unit price discounts
Abstract
Suppliers often offer price discounts for large purchases. These
discounts are generally of two types: all-unit discounts and incremental
discounts. In an all-unit discounting scheme the discounts are offered
to every unit purchased whereas in the incremental discounting scheme
discounts are offered only to the additional units ordered beyond a
specified quantity. Hadley and Whitin[1] provide a procedure for
computing the economic order quantity (EOQ) with a discounting
pricing scheme. Sethi[2] has considered the possibility of disposals of
excess purchases at some finite cost in order to take advantage of
discounts. Das[3] has considered the case when units are charged more
for larger quantity orders. This article deals with all unit discounting
and introduces an improved procedure for determining the optimal lot
size.
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