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Chapter 11 Raw
Chapter 11 Raw
𝐶𝑒𝑙𝑙
=√((2𝐷(𝑆_𝑅+𝑆_𝑀))/(ℎ_𝑅
_𝑀 𝐶_𝑀 ))
Fixed cost per order = $ 100.00 per order The manufacturer offers a quantity discount to encourage the
retailer DO to order the supply chain optimum (9,165). This is d
Monthly demand = 10,000 bottles
structuring a quantity discount where the quantity in Cell B9 is
Holding percentage = 20% set to be the supply chain optimal order size from Cell D15 in
worksheet Example 11.9. For orders at or above this size, a
discount is offered to compensate DO for the additional cost
Pricing: Min Quantity Price per sq. ft. (Cell D19 from sheet Example 11.9). The cost in Cell C9 is
0 $ 3.00000 calculated so that at the end of the year the discount
0 $ 3.00000 compensates DO for the additional holding and ordering cost.
Manufacturer can charge an up front franchise fee in Cell B6 (to extract all his profits
up front) while ensuring that DO gets at least the same profits he gets in Cell D7 of
sheet 2-stage when the two stages are not coordinated. Any franchise fee between
$120,000 and $180,000 will work. Total supply chain profits (Cell B10) are higher in this
case compared to the non-coordinated case.
Two Stage Supply Chain: Volume Based Discounts