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A comparison of just‐in‐time inventory and the quantity discount model in retail outlets

Seyed‐Mahmoud Aghazadeh (Seyed‐Mahmoud Aghazadeh is Professor of Production and Operations Management in the Department of Business Administration, State University of New York at Fredonia, Fredonia, New York, USA.)

Logistics Information Management

ISSN: 0957-6053

Article publication date: 1 August 2001

Abstract

The inventory management system of a discount retail store was examined. A just‐in‐time inventory management model and a quantity discount model were used to determine the appropriateness of each model for the retail outlet. Based on the calculations performed, it was determined that utilizing a retail just‐in‐time (JIT) policy is unrealistic. Customer demands constantly change, and shortages due to stock‐outs can cause huge losses in profits, especially when customers are lost to competitors. Additionally, the quantity discount model provides the lowest total cost for a retail outlet. Not only are the prices cheaper when inventory is bought in large quantities, but shortages or stock‐outs are rare. The optimal solution for a retail store is implementing the quantity discount method.

Keywords

Citation

Aghazadeh, S. (2001), "A comparison of just‐in‐time inventory and the quantity discount model in retail outlets", Logistics Information Management, Vol. 14 No. 3, pp. 201-207. https://doi.org/10.1108/09576050110390239

Publisher

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MCB UP Ltd

Copyright © 2001, MCB UP Limited