Note—On “A Quantity Discount Pricing Model to Increase Vendor Profits”

Avijit Banerjee

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Supply Chain and Inventory Management Quality and Supply Management Sustainable Supply Chain Management

Abstract

Monahan (Monahan, James P. 1984. A quantity discount pricing model to increase vendor profits. Management Sci. 30 (June) 720–726.) develops a model for establishing an optimal quantity discount schedule from a vendor's viewpoint. In this note we show that this model is limited to the case where the vendor buys from another supplier. Incorporating vendor's inventory carrying costs, we develop a generalized version of Monahan's model and demonstrate its equivalence with the joint economic lot size approach suggested by Banerjee (Banerjee, Avijit. 1986. A joint economic lot size model for purchaser and vendor. Decision Sci. 17 (Summer) 292–311.).

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1986A JOINT ECONOMIC‐LOT‐SIZE MODEL FOR PURCHASER AND VENDOR 1977An integrated inventory model for a single supplier-single customer problem 1984A Quantity Discount Pricing Model to Increase Vendor Profits

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