IDEAS home Printed from https://ideas.repec.org/a/inm/oropre/v42y1994i1p14-23.html
   My bibliography  Save this article

A Procurement Decision Support System in Business Volume Discount Environments

Author

Listed:
  • Amir A. Sadrian

    (Bell Communications Research, Red Bank, New Jersey)

  • Yong S. Yoon

    (Korea Telecom, Seoul, Korea)

Abstract

Emergence of a new discount pricing schedule called Business Volume Discount becomes a major obstacle for procurement managers in finding the best purchasing strategy. In the context of business volume discount, a supplier offers discounts on total dollar amount of sales volume, not on the quantity or variety of the products purchased from the supplier. This paper describes a Procurement Decision Support System (PDSS) that has been successfully implemented to improve the purchasing activities of regional Bell telephone companies. In most purchasing operations, a flexible procurement plan is considered a necessity because of the uncertainties associated with product demand and procurement budget. PDSS provides this flexibility by combining two different purchasing strategies—purchasing on an annual commitment basis, and on an as-ordered basis. Although the development of the system is motivated by a particular application (procurement of transmission plug-in) in one of the regional telephone companies, the system is being used for a variety of procurement decisions involving business volume discount in the telecommunications industry. The results of the implementation indicate that cost savings of up to 15% are achieved. PDSS use is not limited to the companies in the telecommunications industry. The PDSS model is applicable to any organization having a centralized procurement operation with business volume discount.

Suggested Citation

  • Amir A. Sadrian & Yong S. Yoon, 1994. "A Procurement Decision Support System in Business Volume Discount Environments," Operations Research, INFORMS, vol. 42(1), pages 14-23, February.
    • Handle: RePEc:inm:oropre:v:42:y:1994:i:1:p:14-23
    DOI: 10.1287/opre.42.1.14
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/opre.42.1.14
    Download Restriction: no
    File URL: https://libkey.io/10.1287/opre.42.1.14?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:oropre:v:42:y:1994:i:1:p:14-23. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.