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| Author: | Mishra, A.K. |
| Title: | Selective discount for supplier-buyer coordination using common replenishment epochs |
| Journal: | European Journal of Operational Research
2004 : MAR, VOL. 153:3, p. 751-756 |
| Index terms: | Supply chain management Inventory control Coordination |
| Language: | eng |
| Abstract: | A supplier may reduce its order costs by providing an incentive in the form of price discounts to buyers to restrict their replenishment intervals to multiples of a common replenishment epoch (CRE). This coordination mechanism was studied by Viswanathan and Piplani who suggested that the supplier offer a discount hat is the maximum of the discount required by all buyers. in this paper, the author generalizes their model to allow for a selective discount policy that, if beneficial, excludes some buyers to minimize the supplier's total cost. Using a computational study, the author observes that offering discounts to buyers selectively, if necessary by segmenting them and offering multiple CRE, reduces the supplier's cost in many scenarios. |
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