The first part of this dissertation describes the initial steps in the research process, which were to identify both the work that had been done in the past and the issues important to real-world companies. First, the extensive quantity discount literature is described, categorized, and tabulated. Second, the literature is compared and contrasted to the findings of a field study consisting of interviews with executives from a wide spectrum of manufacturing and service industries. Current industry trends are described with respect to the reasons that firms offer quantity discounts; the characteristics of the discount schedules; and the effect of quantity discounts on the degree of centralized purchasing, the number of suppliers, and Just-In-Time delivery. A number of directions for future research are identified--two of which are undertaken in the second part of the dissertation.;Numerous examples exist that illustrate how companies enjoying a strong position in a supply chain unilaterally dictate terms to their suppliers and/or their customers. The first model in the dissertation suggests a mechanism by which a company can coordinate its purchasing and production functions and create an integrated plan that dictates order and production quantities throughout a three-firm channel. It is shown that incorporating quantity discounts into both ends of the supply chain can significantly decrease costs compared to concentrating only on the lower end, as previous studies had done.;The second model in the dissertation tackles the issue of centralized purchasing decisions, of which quantity discounts often play a major role. Formulas are developed to compute the expected costs of purchasing, supplier management, ordering, transportation, pipeline inventory, cycle inventory, and inventory overage & underage. These costs differ depending on the degree of centralization, which is represented by either full or partial adoption of (1) decentralized purchasing, (2) centralized purchasing, or (3) centralized pricing with decentralized purchasing. For large problems, a very efficient solution procedure is suggested that has provided good solutions very quickly under experimentation.
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