Suppose you were a supplier for a single customer having a deterministic, but time-varying demand pattern. Interestingly enough, the time-varying nature is actually of benefit to you!

a. Making use of the Silver–Meal heuristic, indicate how you would decide on the maximum discount that you would be willing to give the customer in return for him/her maintaining his/her current pattern instead of providing a perfectly level demand pattern. Assume that replenishments can take place only at the beginning of periods.

b. Illustrate for the numerical example of Problem 6.5. Suppose that the current selling price is $60/unit.