A Decision Supp Ort System For Group Buying

MANAGEMENT SCIENCE Vol. 35, No. 6. Junc 1989 in IPrinted U.S.A. A conciliate GAME THEORY MODEL OF QUANTITY DISCOUNTS* RAJEEV KOHLI AND HEUNGSOO PARK Joseph M. Katz negociate School of Business, University of Pittsburgh, Pittsburgh, Pennsylvania 15260 College of Business and Economics, Yonsei University, Seoul, Korea Quantity discounts offeredby a monopoliser are consideredin the context of a bargainingproblem in which the buyer and the vendor negotiate over the order quantity and the average social unit of measurement value. All-units and incremental quantity discounts that permit transaction at a negotiated outcome are described. The effects of risk sensibility and bargainingpower on quantity discounts are discussed for alternative bargaining models. (MARKETING-DISTRIBUTION; MARKETING-PRICING; dicker; line/PRODUCTION-EOQ) 1. Introduction Quantity discounts are often employ in pricing policies. Rachman (1975) and Howell, Kuzdrall, Britney and Wilcox (1986) note their widespread use and their greatness to market strategy. Rao (1980) adumbrates that quantity discounts should take into account inflation, mergersamong buyers, and increased mundaneness in buyers orderingpolicies.

Heirritz and Farrel (1971) examine quantity discounts from the purchasers viewpoint, urging buyers to take receipts of discounts because the price differentials can be significant. Researchers in marketing and political economy suggest three main reasons for quantity discounts: (i) perfect secernment against a single buyer or a homogeneous multitude of buyers (Buchanan 1953, Gabor 1965, Moorthy 1984), (ii) partial discrimination against a heterogeneous group of buyers (Oi 1971, Leland and Meyer 1973, Faulhaber ! and Panzar 1977, spud 1977, Spence 1977, Oren, Smith and Wilson 1982, 1983), and (iii) improved efficiency of transactions surrounded by a seller and a buyer (Crowther 1964, Foraker 1961, Dolan 1978, Lal and Staelin 1984, Monahan 1984, Lee and Rosenblatt 1986, dada and Srikanth 1987). Dolan (1987)...If you fatality to get a full essay, order it on our website: OrderEssay.net

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