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Title: The Optimal Order Quantity Problem with Quantity Discounts: A Mixed Bivalent Integer Formulation

Authors: Peter M. Ellis

Addresses: Author address listing can be found in the "About the Authors" section at the end of the article.

Abstract: A bivalent mixed integer formulation of the economic order quantity problem is presented here. This model accommodates varying demand over the several periods of a planning horizon. It seeks to minimize the total of cost of goods, fixed ordering costs and inventory carrying costs over the horizon. The model incorporates quantity discounts that are made possible if a purchase amount is large enough. The model determines the amount of inventory to acquire in each period of the time horizon. It establishes the cost of goods by determining the purchase quantity in each period to match the corresponding unit price.

Keywords: Order quantity problem; quantity discounts; mixed bivalent integer formulation; cost minimization; inventory management.

DOI: 10.1504/JBM.1997.141038

Journal of Business and Management, 1997 Vol.5 No.1, pp.66 - 76

Published online: 05 Sep 2024 *