Diversification under supply uncertainty has been adopted by manufacturers
in order to improve performance. Ln the presence of multiple suppliers, it
is essential to develop an operational policy in order to utilize the servi
ces of different suppliers effectively. Anupindi and Akella (Manage. Sci. 3
9 (8) (1993) 944-963) consider two suppliers differing in cost and reliabil
ity and develop the optimal inventory policy for the manufacturer under con
tinuous demand distribution. The policy obtained by them indicates that the
manufacturer should never order products from the more expensive supplier
alone. In this paper, we consider the case where demand is discrete and pro
vide examples to show that ordering products from the more expensive (and m
ore reliable) supplier alone is optimal. We also provide sufficient conditi
ons under which it is optimal to order a larger share from the more expensi
ve supplier when demand is discrete. (C) 1999 Elsevier Science B.V. All rig
hts reserved.