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The Role of Quantity Discounts in the Presence of Heterogeneous Buyers

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Abstract

In this paper we develop a model to examine the role of quantity discounts in synchronizing production and order cycles for a system consisting of one manufacturer and two heterogeneous buyers. The model developed can serve as a guideline for the manufacturer and the buyers as how to integrate their decisions to achieve higher benefits. The numerical examples indicate that the benefit of synchronization decreases with the degree of heterogeneity of the buyers. The conditions under which it is profitable for the manufacturer to synchronize with the heterogeneous buyers are demonstrated through numerical examples.

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Authors and Affiliations

  1. School of Business, University of Wisconsin-Madison, Madison, WI, 53706, USA

    Z. Kevin Weng

  2. Department of Management, Worcester Polytechnic Institute, 100 Institute Road, Worcester, MA, 01609, USA

    Amy Z. Zeng

Authors
  1. Z. Kevin Weng
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  2. Amy Z. Zeng
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Kevin Weng, Z., Zeng, A.Z. The Role of Quantity Discounts in the Presence of Heterogeneous Buyers. Annals of Operations Research 107, 369–383 (2001). https://doi.org/10.1023/A:1014979822085

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  • DOI: https://doi.org/10.1023/A:1014979822085

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