What is a make or buy decision quizlet?
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-Firms facing a continue-to-make or buy decision for a component must evaluate marginal costs of the decision. -The decision to buy will depend on whether the firm can utilize the released machinery capacity profitably or not. -If machinery will become idle, then fixed (sunk) costs become irrelevant and only variable costs should be compared to the buy price in the analysis. -If, on the other hand, machinery does not become idle, but will be used profitably elsewhere, then both variable and fixed costs should be compared to the buy price. Recommended textbook solutions
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Information Technology Project Management: Providing Measurable Organizational Value5th EditionJack T. Marchewka 346 solutions Operations Management: Sustainability and Supply Chain Management12th EditionBarry Render, Chuck Munson, Jay Heizer 1,698 solutions What is a makeA make-or-buy decision is an act of choosing between manufacturing a product in-house or purchasing it from an external supplier. Make-or-buy decisions, like outsourcing decisions, speak to a comparison of the costs and advantages of producing in-house versus buying it elsewhere.
What is an example of a makeExamples of a Make-or-Buy Decision
ABC Manufacturing Company is contracted to supply 6,000 units of its MVP. This would also require 6,000 units of a component essential for the MVP. The estimated cost of manufacturing these 6,000 units of the necessary component is roughly 234,000 USD.
Why is makeAdvantages of Make or Buy Decision
The finding helps choose the most efficient option to go about in-house production of outsourcing. The decision helps in the strategic maneuver of the business. The decision helps save the cost for many businesses.
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