Optimal Lot Sizing Under Carload Discount Schedules

In order to encourage customers to buy more of an item, suppliers often offer discount schedules, most common ones being all-units and incremental discounts. The carload discounts schedule is one of the simplest schedules that are commonly used in practice. In this paper, an optimal lot sizing procedure is developed for this model. It turns out that the procedure is extremely simple, contrary to the expectations reported in the literature.