VERIFYING A SUPPLIER’S TIERED PRICE QUOTATION
(Part II: QDA Range)
© Frank Haluch 2011-2025
In Part 1: Quantity Discount Analysis – Specific, an actual quote was analyzed and shown to have IRRATIONAL PRICING. The analysis revealed a ROLLER COASTER pricing pattern where incremental quantity pricing ranged from a 96% discount to a 2,846% price increase.
This post shows Quantity Discount Analysis – Range where a tiered range price quotation can be analyzed. QDA – Range analysis reveals two important points:
The below real example uses the SourcingApps QDA-Range tool. The analysis exposes hidden information in the five quantity ranges.
MAXIMUM QUANTITY TO PURCAHSE IN EACH RANGE: Row 4 shows the maximum quantity to order in each range. In the first range the maximum units to order are 2,354. Why? Because you can buy 2,500 for the same cost as 2,354 ($74,975). Similar results in other breaks.
That’s hidden information the sourcing professional uncovered and needs to be digested by their organization. Should we buy more than needed because there is no additional cost for a higher quantity? How would accounting handle this?
IRRATIONAL PRICING: After calculating the maximum units to order, the analysis goes on to calculate the incremental cost in each range. The incremental unit cost decreases until, in Column 4, the incremental cost increased by $1.54 per unit for 4,138 units. A 7.90% price increase! This anomaly needs to be explained.
More hidden information and proof this analysis is important.
During the past five weeks, we have established how Price Productivity Analysis and Quantity Discount Analysis tools are able to be convert data into evidence-based information. Feel free to submit any pricing examples for analysis. Obviously, supplier identification and other confidential information should not be shown in this public forum. Alternatively, contact #Frank Haluch through Messaging for a one-on-one confidential analysis.
Also, go to sourcingapps.com to download a demonstration version of Sourcing Apps that contains Quantity Discount Analysis - Specific, and other apps.
Next post will list the analytical tools included in SourcingApps and set up for Price and Cost examples.
Sourcing is for Convergent Thinkers!
