On computing optimal (Q,r) replenishment policies under quantity discounts

Abstract

This article studies the classical reorder quantity, order point (Q,r) continuous review stochastic inventory model with Poisson arrivals and a fixed lead time. This model has been extensively studied in the literature and its use in practice is widespread. This work extends previous research in this area by providing efficient algorithms for the computation of the optimal (Q ∗,r ∗) values when there is a multi-breakpoint discount pricing structure.