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The Construction of an Optimal Discount Pricing Policy to Gain Economic Advantages and to Increase Vendor Profits without Making any Potential Channel Conflicts between a Seller and its Buyer : a Case Study in PT Kendedes Internusa Dinamika at Malang
As the seller's orientation to their customer(s) changed significantly on the
last decade, the vendor doubtlessly has to maintain the consumer's satisfaction. One
of the common things to keep the consumer's loyalty is a quantity discount pricing
policy. A well developed discount pricing policy will give a win-win solution: the
seller will give its buyer a relatively great discount if the buyers agree to order a
certain amount of goods from the seller. Unfortunately, the quantity discount pricing
scheme from the supplier's point of view hasn't been addressed adequately. Many
studies and literatures just emphasize to how the buyer(s) should reacts the seller's
pricing schedules.
Monahan (1984) has been developed a model based from the Economic
Order Quantity (EOQ) model. The purpose of this model is to arrange an 'optimal'
discount pricing scheme to explain the important economic implications from the
buyer's and supplier's point of views. The surprising result is that the supplier can
always improve his profit by setting the discount just in the right level.
This paper is trying to reformulate the seller's yearly net profit by presenting
the vendor's annual holding cost in the vendor's yearly net profit formulation. This
factor must be included in the vendor's yearly net profit formulation because in the
case study the vendor can not practice lot for lot order to the manufacturer for safety
reason.
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