University of Delaware, USA

Correspondence: R. L. Aull-Hyde, Operations Research Program/Department of Food and Resource Economics, 227 Townsend Hall, University of Delaware, Newark, DE 19717-1303, USA.

Received April 1994; Accepted March 1996.

Abstract

Optimal purchasing policies are derived for a continuous review inventory system in which backlogs are permissible and temporary price discounts are available. This paper derives such policies assuming that the sale price is not available at the regularly-scheduled replenishment time. Results indicate that, under specific conditions, maximum positive cost savings are generated when a special order is placed at the end of the sale period.