The evaluation of discounts in co-ordinated control inventory models

An important component of an inventory control model is the algorithm for evaluating alternative discount proposals and selecting a total replenishment quantity. Although many algorithms have been developed none are specifically designed for co-ordinated control of several items where demand is probabilistic. A probabilistic model is developed in this paper and is compared with simpler, more traditional models. Based on this comparison a procedure is selected for use in a new class of inventory control models. These models have been shown to outperform existing methods (IBM's IMPACT Inventory Control Package).