A periodic-review stochastic inventory model with quantity discounts

We examine a periodic-review stochastic inventory model with quantity discounts from the buyer's perspective. In each period the buyer places an order to meet stochastic demands and receives a price discount on purchases in excess of a price break point. Our analytical and computational results suggest that the buyer's optimal order-up-to inventory levels depend on initial inventory and the price break point. We also provide some counter-intuitive results, compared with the traditional multi-period newsvendor model. Key Words: Quantity discounts, Stochastic inventory model, Periodic-Review
1. INTRODUCTION This paper considers a periodic-review stochastic inventory model with quantity discounts from the buyer's perspective. In each period the buyer places an order with the supplier to meet [...]