4 For Sellers: What Discounts to Offer

摘要

This section covers the seller's and joint perspective quantity discount literature. The basic idea is for sellers to anticipate how rational buyers will react to quantity discounts and then to design profit-maximizing pricing schedules accordingly. In many of these models, a single optimal order quantity exists; therefore, a quantity discount with only one price breakpoint is proposed. A feature that differentiates seller cost functions from buyer cost functions is the existence of lumpy, rather than continuous, demand. In other words, unlike the EOQ modeling environment, in B2B transactions demand often appears in "lumps," that is, large quantities ordered infrequently (because the buyers may be ordering their own EOQs from the sellers).