For commodity products where price is set by the market,manufacturers can use lot size-based quantity discounts to achieve coordination in the supply chain and decrease supply chain cost.

Question

Quizplus · Accepted Answer

Lot size-based quantity discounts incentivize retailers to purchase larger quantities of a product, which improves economies of scale for the manufacturer and reduces overall supply chain cost. This can help achieve coordination in the supply chain by aligning the interests of the manufacturer and retailer. However, this strategy is only effective for commodity products where price is set by the market, as opposed to products with unique features or branding where price is determined by the manufacturer.

For Commodity Products Where Price Is Set by the Market,manufacturers