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Make or Buy Decision

Make or Buy Decision

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Published by simply_coool

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Published by: simply_coool on Jun 20, 2009
Copyright:Attribution Non-commercial

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02/21/2013

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Make or Buy decision
 
Make or Buy Decisions
It is the act of making a strategic choice between producing anitem internally (in-house) or buying it externally (from an outsidesupplier).
A firm’s
Make-or-Buy 
choices should be based on the followingconsiderations:
Strategic impact
Available capacity
Expertise
Quality considerations
Speed
Cost
(fixed cost + variable cost)make = (fixed cost + Variable cost)buy
 
Factor’s
--Impact on current vendor relation--Nature of demand-- Availability and lead time for acquiring the technical expertisefor producing the item.--Current capacity utilization-- Develop new strategic process capabilities.--Break even analysis.

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