Supplier's pricing policy in a Just-in-Time environment

We analyze the impact of all-units quantity discounts on channel coordination in a system consisting of one supplier and a group of heterogeneous buyers. A cash-flow-oriented lotsizing model shows the supplier's pricing decision as well as the buyers' purchasing decisions. In order to fully exploit the existing coordination possibilities, an all-units quantity discount schedule with multiple price breaks is considered. Our analysis provides insight into the efficiency of channel coordination through quantity discounts, as well as the influence of the number of price breaks and the heterogeneity of the system. We show that quantity discounts significantly improve the supplier's as well as the buyers' efficiency.