The EOQ Model with Quantity Discounts
•So far, we have assumed the unit-purchasing price is constant.
•However, most suppliers allow for quantity discounts for sufficiently
large replenishment orders.
•The discount may occur at two levels
– At single price level
– At several price level
Discount as single price level aims at comparing the total cost for
optimal economic order quantity without discount with total cost if
suppliers offers the discount.
•On the other hand, at several price levels yields a model with price breaks.
•Suppliers offer a price cut depending on the size of quantity purchased.
•The more the quantity the less the purchase price.
•In order to select the optimal inventory in the model with price breaks, we
