Determining Optimal Discount Policies in B2B Relationships

Viktoryia Buhayenko, Erik van Eikenhorst

2014

Abstract

This research studies which discounts a supplier needs to offer to give incentive to his customers to change their order patterns in a way that minimizes the supplier's total cost. Savings for the supplier arise from reduction of set up and inventory costs. The problem of when and how much discount to offer is not so often addressed in the literature. This approach is very different from the yield management in the fact that if the price changes in one period it will affect the demand in other periods. Two heuristic algorithms have been developed for a one-item non-restricted case with multiple customers. The numerical example shows that although the demand doesn’t change and the revenue of the supplier decreases because of the discounts offered, the supplier gets higher profit.

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Paper Citation


in Harvard Style

Buhayenko V. and van Eikenhorst E. (2014). Determining Optimal Discount Policies in B2B Relationships . In Doctoral Consortium - DCORES, (ICORES 2014) ISBN Not Available, pages 3-9


in Bibtex Style

@conference{dcores14,
author={Viktoryia Buhayenko and Erik van Eikenhorst},
title={Determining Optimal Discount Policies in B2B Relationships},
booktitle={Doctoral Consortium - DCORES, (ICORES 2014)},
year={2014},
pages={3-9},
publisher={SciTePress},
organization={INSTICC},
doi={},
isbn={Not Available},
}


in EndNote Style

TY - CONF
JO - Doctoral Consortium - DCORES, (ICORES 2014)
TI - Determining Optimal Discount Policies in B2B Relationships
SN - Not Available
AU - Buhayenko V.
AU - van Eikenhorst E.
PY - 2014
SP - 3
EP - 9
DO -