Optimal Lot Sizing For Carload Discount Schedules

Samir Elhedhli and Ömer S. Benli

To appear in INFOR: Canadian Journal of Operational Research and Information Processing, 2004.

In order to encourage customers to buy more of an item, suppliers often offer discount schedules, most common ones being all-units and incremental discounts.
The carload discounts schedule is one of the simplest schedules that are commonly used in practice. In this paper, an optimal lot sizing procedure is developed for this model. It turns out that the procedure is extremely simple, contrary to the expectations reported in the literature.