When are quantity discounts justified in a supply chain?
Answer to relevant QuestionsWhat is the difference between lot size-based and volume-based quantity discounts? As a firm gets better at postponement (can postpone at lower cost), should it increase/leave unchanged/decrease the variety that it offers? Why? Why is Amazon able to provide a large variety of books and music with less safety inventory than a bookstore chain selling through retail stores? Zara has used local production in Europe to have short replenishment lead times. How does this capability of quick response help the company improve profits in a highly volatile trendy apparel marketplace? What are some ways that a firm such as Wal-Mart benefits from good sourcing decisions?
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