Dynamic Procurement, Quantity Discounts, and Supply Chain Efficiency
Feryal Erhun, Pinar Keskinocak, Sridhar Tayur
Production and Operations Management · 2008 · Volume 17 · Issue 5
Abstract
We study a model with a single supplier and a single buyer who interact multiple times before the buyer sells her product in the end-consumer market. We show that when the supplier uses a wholesale price contract, even under perfect foresight, the supplier, the buyer, and the end consumers benefit from multiple trading opportunities versus a one-shot procurement agreement.
Keywords
strategic interactions, advance capacity procurement, incremental quantity discounts, supply chain coordination
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