The dynamic lot size model with quantity discount

Awi Federgruen · Chung‐Yee Lee

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Supply Chain and Inventory Management Scheduling and Optimization Algorithms Optimization and Mathematical Programming

Abstract

This article treats the dynamic lot size model with quantity discount in purchase price. We study the problem with two different cost structures: the all-units-discount cost structure and the incremental-discount cost structure. We solve the problem under both discount cost structures by dynamic programming algorithms of complexity O(T3) and O(T2),respectively, with T the number of periods in the planning horizon.

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References

1964Analysis of Inventory Systems.1958Dynamic Version of the Economic Lot Size Model 2004Dynamic Version of the Economic Lot Size Model 1986Decision systems for inventory management and production planning 1984A Quantity Discount Pricing Model to Increase Vendor Profits 1975Operations Research in Production Planning, Scheduling and Inventory Control.1984An Approach for Developing an Optimal Discount Pricing Policy 1969Production-Inventory Systems: Planning and Control

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2005An economic lot‐sizing problem with perishable inventory and economies of scale costs: Approximation solutions and worst case analysis 2003Supply Chain Design and Planning – Applications of Optimization Techniques for Strategic and Tactical Models 2000The deterministic multi-item dynamic lot size problem with joint business volume discount 2017Dynamic lot sizing with multiple suppliers, backlogging and quantity discounts 2019A multi-period multi-commodity lot-sizing problem with supplier selection, storage selection and discounts for the process industry

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