An EOQ Model with Quantity Discounts and Environmental Objective

Abstract

In this study, we investigate a retailer's bi-objective Economic Order Quantity (EOQ) model with quantity discounts. The objectives of the model are cost and emission minimizations. We explicitly characterize the Pareto Front of this bi-objective EOQ model when a two-part all-units discounts schedule is offered by the supplier. This characterization considers different cases defined based on the cost-minimizing and emission-minimizing order quantities. Later, numerical examples are used to demonstrate that quantity discounts can decrease costs and emissions of the retailer or can decrease costs while increasing emissions of the retailer. Therefore, we argue that quantity discounts are not necessarily beneficial for the environment. A few future research directions considering the two-echelon setting, with supplier and retailer, are noted.

Meeting Name

IISE Annual Conference and Expo 2018 (2018: May 19-22, Orlando, FL)

Department(s)

Engineering Management and Systems Engineering

Keywords and Phrases

Sales; All-units discount; Discount; Economic order quantity models; Environment; Environmental objectives; Future research directions; Inventory; Quantity discount; Economic analysis; Discount; Environment; Inventory

Document Type

Article - Conference proceedings

Document Version

Citation

File Type

text

Language(s)

English

Rights

© 2018 Institute of Industrial and Systems Engineers (IISE), All rights reserved.

Publication Date

01 May 2018

Link to Full Text

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