ECONOMIC ORDER QUANTITIES WITH QUANTITY DISCOUNTS: GRANDMA DOES IT BEST

Abstract

ABSTRACT We examine a new algorithm developed by Kuzdrall and Britney [5] for locating the optimal order quantity in the presence of quantity discounts. Their algorithm, based on a model for the supplier's formulation of the price schedule, involves a regression analysis to identify the supplier's variable cost per unit and the fixed cost that the supplier seeks to recover, followed by an iterative search for the optimum. The authors describe this method as a “convenient alternative to the aimless searching of traditional approaches” [5, p. 101]. We examine the allegation of superiority of their total setup lot‐sizing model over the classical method and dispute their claim of superiority.