Purpose: Our paper is to analyze optimal purchasing strategies when a manufacturer can buy raw materials from a long-term contract supplier and a spot market under spot price uncertainty. Design/methodology/approach: The procurement model is solved by using dynamic programming. First, we maximize the DM’s utility of the second period, obtaining the optimal contract quantity and spot quantity fo...

Quantity discounts are a useful mechanism for coordination. Here we investigate such discounts from the supplier’s perspective, both from a non-cooperative game-theoretical approach and a joint decision model. Taking into account the price elasticity of demand, this analysis aids a sole supplier in establishing an all-unit quantity discount policy in light of the buyer’s best reaction. The Stac...

In the traditional economic order quantity/economic production quantity model, most of the items considered are of perfect type. But this situation rarely takes place in practice. Thus, in this paper, an economic order quantity model with imperfectquality items is developed. 100% screening process is performed, and the items of imperfect quality are sold as a single batch. A proportionate ra...

We investigate how a quantity discount schedule can be used to influence stocking decisions and supply chain performance in single-period interactions between a supplier and buyer(s). In contrast to much of the work that has been done on single-period supply contracts, we assume that there are no interactions between the supplier and the buyer(s) after demand information is revealed. Furthermor...

In contrast to the existing literature on repeated games that assumes a Þxed discount factor, I study an environment in which it is more realistic to assume a ßuctuating discount factor. In a repeated oligopoly, as the interest rate changes, so too does the degree to which Þrms discount the future. I characterize the optimal tacit collusion equilibrium when the discount factor changes over time...