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Book part
Publication date: 1 July 2004

John L. Peterman

A study of the price discounts granted by Morton Salt Company and other producers of table salt in the U.S. on their sales of table salt to grocery wholesalers and…

Abstract

A study of the price discounts granted by Morton Salt Company and other producers of table salt in the U.S. on their sales of table salt to grocery wholesalers and retailers. The discounts were found to be illegal under the Robinson-Patman Act by the Federal Trade Commission and the Supreme Court. The Commission and the Court believed that the discounts were unjustified price concessions granted to “large” buyers, consistent with the concerns of the Robinson-Patman Act. However, the evidence indicates that the most common discount – the “carload discount” – was received by virtually all buyers, regardless of the buyer’s size; the other discounts – “annual volume” discounts – though received primarily by “large” buyers, were likely cost based. The history of the discounts and likely reasons why they were granted are explored in detail.

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Antitrust Law and Economics
Type: Book
ISBN: 978-0-76231-115-6

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Article
Publication date: 1 September 1992

Randolph M. Russell and Martha C. Cooper

Addresses a number of issues relating to determining whetherproducts should be ordered independently and therefore shipped as asingle‐product order, or co‐ordinated and…

Abstract

Addresses a number of issues relating to determining whether products should be ordered independently and therefore shipped as a single‐product order, or co‐ordinated and shipped as a group, or multiproduct, order from a single source. Factors which might influence the decision include the level or volume of demand, the distribution of demand across products, the weight of items and the attractiveness of the quantity discount offered. Uses an optimal inventory‐theoretic model, that incorporates transport weight breaks and quantity discounts, to assess when product orders should be combined and what products should be ordered separately. The effects of these decisions on the order interval, the number of order groupings, the proportion of items ordered independently, the proportion of attractive discounts forgone in favour of consolidation, and the relative cost savings, are examined using an extensive set of simulated data that are based on a firm in the automobile industry supply chain.

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International Journal of Physical Distribution & Logistics Management, vol. 22 no. 9
Type: Research Article
ISSN: 0960-0035

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Article
Publication date: 16 November 2015

Valdecy Pereira and Helder Gomes Costa

This paper aims to present a literature review on models developed for the economic order quantity (EOQ) problem with incremental and all-units discounts, extending the…

Abstract

Purpose

This paper aims to present a literature review on models developed for the economic order quantity (EOQ) problem with incremental and all-units discounts, extending the work of Benton and Park (1996) which covered the most significant literature, from 1963 to 1994, about EOQ with discounts and that has identified four open areas in this field of study. The modeling of lot size with discounts wishes to give good solutions for realistic situations, such as those concerning the discounts offered by suppliers, to rises in the demand.

Design/methodology/approach

The research was carried out in papers published from 1995 to 2013, and indexed in databases as Scopus and ISI Web of Science. The papers were compared through objective function, constraints, discounts, developed algorithms, allowance of shortages or multiproduct, demand pattern and buyer or buyer–supplier perspective.

Findings

Results indicate two areas that still remain untouched, and probably the main cause is due to mathematical complexities. The authors have also identified an increasing trend of works that compared just-in-time with the EOQ with quantity discounts policy and also an increasing number of works that solved this category of problems with algorithms.

Research limitations/implications

The research does not cover materials published in working papers, monographs, thesis, conferences or journals that are not indexed in those databases.

Originality/value

This manuscript fills a gap in the study of EOQ with incremental discounts, as it highlights the leading edge advances in this field and the main differences among models. As a whole, the new trends about modeling EOQ problems with quantity discounts were discovered.

Details

Journal of Modelling in Management, vol. 10 no. 3
Type: Research Article
ISSN: 1746-5664

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Article
Publication date: 5 December 2016

Hye Kyung Park, Bong-Sup Shin and Jong-Ho Huh

This paper aims to examine how the temporal distance can influence the effect of the scarcity message. To demonstrate this effect, the authors use the limited-quantity

Abstract

Purpose

This paper aims to examine how the temporal distance can influence the effect of the scarcity message. To demonstrate this effect, the authors use the limited-quantity flash sales and compare two types of mixed promotion method comprising discount rate and limited quantity.

Design/methodology/approach

The results of the experiment reveal that consumers in the temporally distant condition have a relatively high-level construal of the limited-quantity flash sales and are more likely to value desirability (discount rate) over feasibility (limited quantity).

Findings

When the expected value is identical, consumers prefer limited-quantity flash sales with smaller limited quantity but higher discount rates. However, consumers in the temporally near condition have a relatively low-level construal of the limited-quantity flash sales and are more likely to value feasibility (limited quantity) over desirability (discount rate).

Originality/value

When the expected value is identical, consumers prefer limited-quantity flash sales with lower discount rates but larger limited quantity.

Details

Asia Pacific Journal of Innovation and Entrepreneurship, vol. 10 no. 1
Type: Research Article
ISSN: 2071-1395

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Article
Publication date: 1 August 2001

Seyed‐Mahmoud Aghazadeh

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…

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.

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Logistics Information Management, vol. 14 no. 3
Type: Research Article
ISSN: 0957-6053

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Article
Publication date: 30 August 2019

Subhash Jha, Sujay Dutta and Ahmet Koksal

This study aims to examine whether adding a quantity scarcity message to a monetary discount helps to improve consumers’ offer-related perceptions and intentions, and how…

Abstract

Purpose

This study aims to examine whether adding a quantity scarcity message to a monetary discount helps to improve consumers’ offer-related perceptions and intentions, and how the effectiveness of that message compares with adding time restriction to the offer.

Design/methodology/approach

Two experiments, where participants evaluated retail ads and responded to relevant measures, were conducted in two country markets.

Findings

Adding either a quantity scarcity message or time restriction to a monetary discount increases the potency of a retail offer. Further, when an offer ad emphasizes product and price-related cues in a balanced manner, time restriction results in more favorable consumer perceptions than scarcity. However, this difference in the messages’ efficacy disappears when the offer strongly emphasizes price-related cues.

Research limitations/implications

The US market sample is more homogeneous than the Indian one. Discounts were presented in terms of advertised reference prices; further research with other discount formats is desirable.

Practical implications

Understanding the relative efficacy of quantity scarcity message and time restriction in discounted retail offers can give managers flexibility in the use of these tools.

Originality/value

This paper addresses scholars’ call for theory-grounded research that provides guidance to retailers on the use of sales promotional tools.

Details

Journal of Consumer Marketing, vol. 36 no. 7
Type: Research Article
ISSN: 0736-3761

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Article
Publication date: 23 November 2017

Yan-Kwang Chen, Chih-Teng Chen, Fei-Rung Chiu and Jiunn-Woei Lian

Group buying (GB) is a shopping strategy through which customers obtain volume discounts on the products they purchase, whereas retailers obtain quick turnover. In the…

Abstract

Purpose

Group buying (GB) is a shopping strategy through which customers obtain volume discounts on the products they purchase, whereas retailers obtain quick turnover. In the scenario of GB, the optimal discount strategy is a key issue because it affects the profit of sellers. Previous research has focused on exploring the price discount and order quantity with a fixed selling price of the product assuming that customer demand is uncertain (but follows a known distribution). This study aims to look at the same problem but goes further to examine the case where not only customer demand is certain but also the demand distribution is unknown.

Design/methodology/approach

In this study, optimal price discount and order quantity of a GB problem cast as a price-setting newsvendor problem were obtained assuming that the distribution of customer demand is unknown. The price–demand relationship is considered in addition form and product form, respectively. The bootstrap sampling technique is used to develop a solution procedure for the problem. To validate the usefulness of the proposed method, a simulated comparison of the proposed model and the existing one was conducted. The effects of sample size, demand form and parameters of the demand form on the performance of the proposed model are presented and discussed.

Findings

It is revealed from the numerical results that the proposed model is appropriate to the problem at hand, and it becomes more effective as sample size increases. Because the two forms of demand indicate restrictive assumptions about the effect of price on the variance of demand, it is found that the proposed model seems to be more suitable for addition form of demand.

Originality/value

This study contributes to the growing literature on GB models by developing a bootstrap-based newsvendor model to determine an optimal discount price and order quantity for a fixed-price GB website. This model can assist the sellers in making decisions on optimal discount price and order quantity without knowing the form of customer demand distribution.

Details

Kybernetes, vol. 46 no. 10
Type: Research Article
ISSN: 0368-492X

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Article
Publication date: 13 February 2017

Valdecy Pereira and Helder Gomes Costa

This paper aims to present a set of five models for the economic order quantity problem. Four models solve problems for a single product: incremental discounts with or…

Abstract

Purpose

This paper aims to present a set of five models for the economic order quantity problem. Four models solve problems for a single product: incremental discounts with or without backorders and all-unit discounts with or without backorders, and the last model solves problems for the multiproduct case.

Design/methodology/approach

A basic integer non-linear model with binary variables is presented, and its flexible structure allows for all five models to be utilised with minor modifications for adaptation to individual situations. The multiproduct model takes into consideration the work of Chopra and Meindl (2012), who studied two types of product aggregations: full and adaptive. To find optimal or near-optimal solutions for the multiproduct case, the authors propose a simulated annealing metaheuristic application. Numerical examples are presented to improve the comprehension of each model, and the authors also present the efficiency of the simulated annealing algorithm through an example that aggregates 50 products, each one with different discount schemes and some allowing backorders.

Findings

Our model proved to be efficient at finding optimal or near optimal solutions even when confronted with mathematical complexities such as the allowance of backorders and incremental discounts.

Originality/value

Finally our model can process a mix of products with different discount schemes at the same time, and the simulated annealing metaheuristics could find optimal or near optimal solutions with very few iterations.

Details

Journal of Modelling in Management, vol. 12 no. 1
Type: Research Article
ISSN: 1746-5664

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Book part
Publication date: 3 February 2015

Zhaobo Wang

Almost all Supply Chain and Operations Management textbooks cover the topic of quantity discount analysis in an inventory management chapter. However, it is a challenging…

Abstract

Almost all Supply Chain and Operations Management textbooks cover the topic of quantity discount analysis in an inventory management chapter. However, it is a challenging topic for many undergraduate students since the calculations are somewhat complicated and many students are uncomfortable with any math-related topic. In order to determine whether it is appropriate to take the advantage of the quantity discount, the classical one-step EOQ model is expanded to a multistep procedure, as all relevant textbooks illustrate when explaining the use of quantity discounts. This chapter demonstrates an alternative way to teach students in order to facilitate their understanding the topic more intuitively, and to allow the student to reach the optimal solution faster in most cases. Therefore, it is suggested that the method presented in this chapter may reduce students’ anxiety toward this topic. The simulation results show that with only two discount thresholds, this alternative method can save over 70% of the calculations. It can allow instructors to save time in the classroom and help students solve the problems faster when doing quantity discount problems on homework or exams.

Details

Applications of Management Science
Type: Book
ISBN: 978-1-78441-211-1

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Article
Publication date: 21 November 2016

Steve Dunphy

This study aims to extend by way of replication an earlier study, “Blind man’s bluff: The ethics of quantity surcharges” (Gupta and Rominger, 1996) by testing several…

Abstract

Purpose

This study aims to extend by way of replication an earlier study, “Blind man’s bluff: The ethics of quantity surcharges” (Gupta and Rominger, 1996) by testing several hypotheses regarding changes in the surcharging phenomenon that may have occurred over time.

Design/methodology/approach

The original study was constructed from data collected 20 years ago. This study went beyond a mere replication. A key difference between this study and the original study was in the method of data collection. In the earlier study, students were used to collect data. In this study, the author personally and carefully recorded the prices of the same 60 items that were noted in the original study. These new prices were then compared with the original ones. Several matched paired t-tests were administered to analyze the mean differences between the two sets of data.

Findings

The tests showed a highly significant difference in today’s pricing structure in comparison to the quantity surcharging phenomenon from the prior study. It was found that both the quantity of the items surcharged and the magnitude of the surcharges decreased in comparison to the surcharging reported in the original study.

Research limitations/implications

Reasons are given regarding what changed and why and suggestions are given for future research in the areas of private or in-store branding, the proliferation of “big box” stores and the changes in the frequency and magnitude of surcharging that may be occurring over time.

Originality/value

This study indicates that the quantity surcharging phenomenon has lessened. In fact, in mature markets which include big box discounters, the quantity surcharging phenomenon of 20 years ago may have given way to today’s quantity discount.

Details

Journal of Product & Brand Management, vol. 25 no. 7
Type: Research Article
ISSN: 1061-0421

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