Procurement from Global, Unreliable, All-or-Nothing Suppliers

Abstract

Source diversification is known to be potentially beneficial in the presence of random yields. Such is even more the case with global sourcing. This Note poses the following question: How much should a newsvendor order from each supplier if these suppliers either deliver the entire amount ordered from them or nothing? We address this question for equally (un) reliable suppliers, as well as for two suppliers of unequal reliability, and contrast it with a situation of a single supplier.