This paper considers a variant of the economic order quantity (EOQ) model under random supply. A
binomial supply model is adopted where every item received is of imperfect quality with the same
probability. We study the realistic case where the qualities of items in an order are correlated
and draw useful insights, the most interesting of which is that correlation decreases the order
size. Several practical correlation patterns are investigated and discussed. We also show that
several commonly used models in the literature can be represented by an equivalent correlated
binomial supply model.