In The Make-or-buy Decision, Which Of The Following Is Not A Reason For Buying?

What are the reasons in making or buying decision?

Factors Considered for Make or Buy Decision

  • Cost concerns (when it is expensive to outsource)
  • Desire to enhance the manufacturing focus.
  • Intellectual property concerns.
  • Quality concerns.
  • Unreliable suppliers.
  • The need for direct quality control over the product.
  • Emotional reasons (for example, pride)

What is a make-or-buy decision quizlet?

Make vs. Buy Decision. the act of deciding whether to produce an item internally or buy the item from an outside supplier. make. Producing (i.e., manufacturing) materials or products internally (i.e., in operations owned by the company).

What is not relevant in a make-or-buy decision?

Make-or-buy decisions must be based on the relevant cost of each option. Relevant costs in make-or-buy decisions include all incremental cash flows. Any cost that does not change as a result of the decision should be ignored such as depreciation and indirect fixed costs.

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What are the three pillars of make-or-buy decision?

This report explores the dynamics of make-or-buy decisions and presents a framework to help companies make the right decisions. The framework is built on three key pillars — business strategy, risks, and economic factors.

What do u mean by make or buy decision?

A 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.

When should a special order be accepted?

A special order generally should be accepted if: A) its revenue exceeds allocated fixed costs, regardless of the variable costs associated with the order.

Which of the following is a reason for outsourcing?

The biggest motivating reason for a company to outsource is to save money. There might be a problem with a supplier or a cost increase in materials and the company needs to reduce costs to stay competitive with its products. Another reason may be the need to downsize due to a merger or acquisition.

What is the goal of purchasing quizlet?

The primary goals of purchasing are: Ensure uninterrupted flows of raw materials at the lowest total cost, improve quality of the finished goods produced, and maximize customer satisfaction. Money firms spend on goods and services.

Which of the following is a danger of vertical integration?

Below are disadvantages to vertical integration: Companies might get too big and mismanage the overall process. Outsourcing to suppliers and vendors might be more efficient if their expertise is superior. Costs of vertical integration such as purchasing a supplier can be significant.

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Why might a company make a product in house rather than buy it?

There are several reasons to manufacture in-house instead of outsourcing production. It gives your company a lot flexibility to alter the product as you produce it. In-house production ensures higher quality control. With production in-house, you can keep your overhead low by avoiding foreign managers.

Which of the following is an example of sunk cost?

A sunk cost refers to a cost that has already occurred and has no potential for recovery in the future. For example, your rent, marketing campaign expenses or money spent on new equipment can be considered sunk costs. A sunk cost can also be referred to as a past cost.

Which of the following costs are always irrelevant in decision making?

Sunk costs are those costs that happened and there is not one thing we can do about it. These costs are never relevant in our decision making process because they already happened! These costs are never a differential cost, meaning, they are always irrelevant.

What is a spend category?

A spend category is the logical grouping of similar expenditure items or services that have been clearly defined on an organizational level. The spend taxonomy is the way a procurement organisation classifies spend into hierarchies.

What is a sourcing strategy in procurement?

Strategic sourcing is a procurement process that connects data collection, spend analysis, market research, negotiation, and contracting. It stops short of the actual purchase of and payment for goods and services.

What is make-or-buy analysis in project management?

A make-or-buy analysis is a general project management technique that is used to identify if a particular work can be accomplished by the project team or should just be purchased from external sources. Another aspect of project management that should be considered is the available contract types.

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