Journal of Korean Society of Industrial and Systems Engineering (산업경영시스템학회지)

Society of Korea Industrial and System Engineering (한국산업경영시스템학회)
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A Study on Inventory Control Policy for Quantity-Discount and Budget Constraint

수량 할인과 예산 제약을 고려한 재고관리 정책에 관한 연구

  • Lee, Dongju (Dept. of Industrial and Systems Engineering, Kongju National University)
  • 이동주 (공주대학교 산업시스템공학과)
  • Received : 2015.04.21
  • Accepted : 2015.06.19
  • Published : 2015.06.30
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Abstract

As order quantity is increased, the ordering cost per item will be cheaper due to saving of transportation and material handling costs. In this paper, two realistic assumptions such as quantity discount and budget limit are considered. Quantity discount means that all units in the order will be discounted according to the predetermined order levels. Budget limit represents that the costs for inventory investments are bounded. This paper develops a Lagrangian relaxation approach for a continuous review inventory model with a budget constraint and quantity discounts. Computational results indicate that the proposed approach provides a good solution. Sensitivity analysis is done to get some insights on budget limit and quantity discount. As budget limit or the amount of discount according to order quantity is increased, order quantity is increased, whereas reorder point is not always increased.

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References

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