Cross-product quantity discounts without requiring a unified discount schedule

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Abstract

Existing cross-product quantity discounts require unifying quantity discount schedules. However, the range of products eligible for a unified schedule is quite limited, particularly those already configured with different schedules, which severely restricts the scope of cross-product quantity discounts. To address this issue, we propose a general algorithm for reasonably computing discounts across any product combination while allowing each product to retain its individual schedule. Our approach is grounded in the observation that, in any quantification process, defining equivalent units is a fundamental prerequisite. By further analyzing the existing quantity discount methods and relevant research, we reveal the three-step methodology that any cross-product quantity discount must follow: (1) defining equivalent units in the context of quantity discounts; (2) establishing rules that allow products to possess such equivalent units; and (3) computing discounts based on these equivalences. Consequently, we uncover a fundamental theoretical gap: the definition of equivalent units in the context of quantity discounts remains unclear, and the corresponding rules remain underdeveloped. By delving into the underlying logic of quantity discounts, we deduce the definition of equivalent units; following the principles of rationality, necessity, and feasibility, we establish the rules and construct the algorithm. While this algorithm has not yet been applied in practice, we validate it through a series of typical simulation test cases, and the results fully comply with theoretical expectations. It paves the way for innovative business models, such as new group-buying, advanced loyalty management, and novel fission marketing, as discussed in this paper.

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