A comparison of different quantity discount pricing policies in a two-echelon channel with stochastic and asymmetric demand information. (English) Zbl 1131.90309

Summary: We study quantity discount pricing policies in a channel of one manufacturer and one retailer. The paper assumes that the channel faces a stochastic price-sensitive demand but the retailer can privately observe the realization of an uncertain demand parameter. The problem is analyzed as a Stackelberg game in which the manufacturer declares quantity discount pricing schemes to the retailer and then the retailer follows by selecting the retail price and associated quantity. Proposed in the paper are four quantity-discount pricing policies: “regular quantity discount”; “fixed percentage discount”; “incremental volume discount” and “fixed marginal-profit-rate discount”. Optimal solutions are derived, and numerical examples are presented to illustrate the efficiency of each discount policy.


90B05 Inventory, storage, reservoirs
91A80 Applications of game theory
Full Text: DOI


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