Journal
OPERATIONS RESEARCH LETTERS
Volume 38, Issue 6, Pages 505-509Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.orl.2010.08.003
Keywords
Inventory management; EOQ; Supplier selection; Binomial yield
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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. (C) 2010 Elsevier B.V. All rights reserved.
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