Lot-sizing decisions under limited-time price incentives: A review

The problem of determining the optimal order quantities for an inventoried item, when the vendor offers a limited-time price reduction is both interesting and important. It is interesting in that it has received continued attention of academic researchers for over four decades and it is important given its economic implication in a variety of practical settings. The extensive literature on this problem represents a fascinating confluence of: (1) economic significance and relevance to managerial practice, (2) continuing academic research interest directed at precise mathematical analysis leading to the development of rigorous and complex models and policies, and (3) elegance and adequacy of simple models and heuristic policies which are validated by the results of rigorous models and computational analysis. In this paper, we survey this literature using simple classification frameworks and then review some of the key studies. We highlight their key assumptions and findings, bring across key implications for policy implementation and academic research and identify avenues for further research.