Inventory Policies with Freight Discounts and Disposals

Abstract

This article considers the effect of freight discounts and disposals on the inventory policies of a profit‐maximising firm with price‐elastic demand and with price as a mark‐up on the acquisition cost. In addition, the cost of placing an order is in part dependent upon a freight‐cost structure, sensitive to the size of the order and upon the possibility of selling unwanted inventory at a lower price. A numerical example is used to illustrate the resulting inventory policies.

Citation

Arcelus, F.J. and Rowcroft, J.E. (1991), "Inventory Policies with Freight Discounts and Disposals", International Journal of Operations & Production Management, Vol. 11 No. 4, pp. 89-93. https://doi.org/10.1108/01443579110143197