Annals of Operations Research

, Volume 200, Issue 1, pp 279–298 | Cite as

On computing optimal (Q,r) replenishment policies under quantity discounts

The all-units and incremental discount cases


This article studies the classical reorder quantity, order point (Q,r) continuous review stochastic inventory model with Poisson arrivals and a fixed lead time. This model has been extensively studied in the literature and its use in practice is widespread. This work extends previous research in this area by providing efficient algorithms for the computation of the optimal (Q ,r ) values when there is a multi-breakpoint discount pricing structure.


Inventory Production Lot sizing Backorders Quantity discounts 



The authors would like to thank Professor Flora Spieksma, Mathematics Institute, University of Leiden, the Netherlands, for many useful comments. Research partially supported by Rutgers Business School Research Committee.


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Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  1. 1.Department of Management Science and Information SystemsRutgers Business School, Newark and New BrunswickNewarkUSA
  2. 2.Mathematisch InstituutUniversiteit LeidenLeidenNetherlands

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