How is the quantity discount model related to the EQD MODEL?

Answer 1

The quantity discount model and the Economic Order Quantity (EOQ) model are both inventory management tools that aim to minimize costs associated with purchasing and holding inventory. The quantity discount model incorporates price reductions based on the volume of purchases, influencing the optimal order quantity to take advantage of these discounts. In contrast, the EOQ model focuses on determining the most efficient order size by balancing ordering and holding costs without considering discounts. Together, they can inform purchasing strategies by combining cost minimization with bulk pricing benefits.