ALL-UNITS QUANTITY-FREIGHT DISCOUNTS WITH DISPOSALS

This paper examines the effect of various freight rate structures and quantity discounts on the inventory policies of ROI and profit maximizing firms with downward sloping, price-elastic demand, lot-sizing policies and price set at a markup on unit cost. Units not sold at the regular price are disposed of at a reduced price. Both the markup and the order quantity are decision variables. Numerical examples are used throughout to illustrate the properties of the model and the sensitivity of the optimal solutions to fluctuations in the parameters.