Journal ArticleDOI
Channel coordination and quantity discounts
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In this paper, the authors present a model for analyzing the impact of joint decision policies on channel coordination in a system consisting of a supplier and a group of homogeneous buyers, where the joint decision policy characterized by the unit selling price and the order quantity is coordinated through quantity discounts and franchise fees.Abstract:
This paper presents a model for analyzing the impact of joint decision policies on channel coordination in a system consisting of a supplier and a group of homogeneous buyers. The joint decision policy characterized by the unit selling price and the order quantity is coordinated through quantity discounts and franchise fees. Both the annual demand rate and the operating cost-including the purchase, ordering, and inventory holding costs-depend on the joint decision policy employed. This paper contributes by integrating work addressing quantity discounts on inventory and ordering policies and work focusing on the control mechanism provided by quantity discounts in channel coordination. It is shown that the optimal all-unit quantity discount policy is equivalent to the optimal incremental quantity discount policy in achieving channel coordination. Furthermore, it is shown that quantity discounts alone are not sufficient to guarantee joint profit maximization. The analyses of the general models are illustrated by specific analytical results obtained for a given demand function.read more
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References
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Journal ArticleDOI
An Industry Equilibrium Analysis of Downstream Vertical Integration
TL;DR: It is found that for most specifications product substitutability does influence the equilibrium distribution structure in a duopoly where each manufacturer distributes its goods through a single exclusive retailer, which may be either a franchised outlet or a factory store.
Journal ArticleDOI
Managing Channel Profits
Abel P. Jeuland,Steven M. Shugan +1 more
TL;DR: It’s time to get used to the idea that the world doesn’t need to know everything about you.
Journal ArticleDOI
A Quantity Discount Pricing Model to Increase Vendor Profits
TL;DR: In this article, the authors analyze how a supplier can structure the terms of an optimal quantity discount schedule to maximize the supplier's incremental net profit and cash flow by adjusting its present pricing schedule to entice a major customer to increase its present order size by a factor of "K".
Journal ArticleDOI
A generalized quantity discount pricing model to increase supplier's profits
Hau L. Lee,Meir J. Rosenblatt +1 more
TL;DR: In this article, the joint problem of ordering and offering price discount by a supplier to his sole/major buyer is analyzed, where the objective is to induce the buyer to alter his order schedule and size so that the supplier can benefit from lower set up, ordering and inventory holding costs.