On the supplier diversification under binomial yield

摘要

In a recent article, Fadiloglu et al. study an EOQ inventory model with multiple suppliers and binomial yields and conclude that sole sourcing is always optimal. This finding is contrary to the literature advocating diversification of the supply base in the presence of uncertainty. In this note, we present an alternative and more elegant proof of the optimality of sole sourcing in the EOQ model with binomial yield. Our approach extends this result to a general structure for the fixed order cost and provides more insights into the problem.