The purpose of this paper is to study sales pricing and
discount strategy for sellers. Here, the suppliers require fixed
order quantities to the sellers. Therefore, to incorporate the
concept of sellers' maximum profit and sales discount into the
model, the author classifies the multi-category goods into
backlog, flat and profitable one. Then the model to determine the
optimal sales price strategy for a sales discount decision system
with fixed order quantities is analyzed. As most of the non-linear
model can be linearization, a mathematical model for sales
discount decision system is developed when demand rate is a liner
function of the sales price. By analyzing the total profit
function, the authors developed some useful results to
characterize the optimal solution and provided a method to find
the sales discount for holdovers. By developing a solution
algorithm, the optimal retail price and sales discount for
holdovers are provided. Case scenarios are presented to validate
the proposed model. Through case scenarios analyses, it is
observed that optimal sales discount can help the sellers earn
maximum profit with constraints of fixed order quantities. Most of
the research articles available in the literature assumed that the
sellers are always in optimal situation. In fact, sellers'
decisions rely on suppliers' decisions in most cases. In this
paper, determination of sales discounts can be seen as sellers
compromise to suppliers by seeking the optimal strategy with
downstream customers. In view of this fact, a mathematical model
is developed considering sales price dependent linear demand and
sellers' profit. Very few researchers have investigated optimal
sales discount decision system with fixed order quantities;
although
it is a real situation the sellers should be faced.