THEORIES AND REALITIES OF QUANTITY DISCOUNTS: AN EXPLORATORY STUDY

Abstract

This paper compares and contrasts the current state of the art in the theory of quantity discounts with a field study of 39 firms. We start by categorizing and tabulating the literature pertaining to quantity discounts, and by summarizing the various studies and models according to their perspectives, assumptions, and characteristics. Next we describe current trends in industry with respect to the reasons why firms offer quantity discounts, the characteristics of discount schedules, and the effect of quantity discounts on the extent of centralized purchasing, number of suppliers, and just‐in‐time delivery. Finally, we identify a number of fruitful directions for future research.