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Dynamic lot sizing with all‐units discount and resales

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  • Chung‐Lun Li
  • Jinwen Ou
  • Vernon N. Hsu

Abstract

We consider a single‐product dynamic lot‐sizing model with an all‐units quantity discount pricing scheme available to the buyer, where the discount price breakpoints are stationary. To capture the real‐life behavior of a typical buyer who often takes advantage of quantity discounts through purchasing in excess of the anticipated demand, our model allows the buyer to resell or dispose of any leftover inventory that he/she does not need. We show that the general problem with an arbitrary number of discount price breakpoints is NP‐hard. We then develop a polynomial algorithm for the problem with an O(Tm+3) running time when the number of price breakpoints, m, is fixed, where T is the number of time periods in the planning horizon. We further develop an O(T2) algorithm for the special case with a single price breakpoint. © 2012 Wiley Periodicals, Inc. Naval Research Logistics, 2012

Suggested Citation

  • Chung‐Lun Li & Jinwen Ou & Vernon N. Hsu, 2012. "Dynamic lot sizing with all‐units discount and resales," Naval Research Logistics (NRL), John Wiley & Sons, vol. 59(3‐4), pages 230-243, April.
    • Handle: RePEc:wly:navres:v:59:y:2012:i:3-4:p:230-243
    DOI: 10.1002/nav.21484
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    Cited by:

    1. Lingfa Lu & Liqi Zhang & Jie Zhang & Lili Zuo, 2020. "Single Machine Scheduling with Outsourcing Under Different Fill Rates or Quantity Discount Rates," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 37(01), pages 1-15, January.
    2. Wang, Huihui & Yu, Yimin & Zhang, Wei & Hua, Zhongsheng, 2019. "Procurement strategies for lost-sales inventory systems with all-units discounts," European Journal of Operational Research, Elsevier, vol. 272(2), pages 539-548.
    3. Ou, Jinwen & Feng, Jiejian, 2019. "Production lot-sizing with dynamic capacity adjustment," European Journal of Operational Research, Elsevier, vol. 272(1), pages 261-269.
    4. Lingfa Lu & Liqi Zhang & Jinwen Ou, 2021. "In-house production and outsourcing under different discount schemes on the total outsourcing cost," Annals of Operations Research, Springer, vol. 298(1), pages 361-374, March.

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