Readers ask: Which Of The Following Factors Should Be Considered In A Make-or-buy Decision?

Why is the make-or-buy decision considered strategic?

The common factors that companies consider in a make versus buy decision include proprietary knowledge, capabilities, quality, capacity, labor, volume, timing, and cost. At the strategic level, the decision to make or buy a component directly impacts organizational profit, and the firm’s reputation in their industry.

Which of the following costs are relevant to a make-or-buy decision?

Examples of relevant costs in the context of a make or buy decision include direct labor, direct materials, variable overhead. Other costs that should be considered in this category are any incremental costs necessary for a part manufacturing.

What other factors should a project manager consider when formulating a make-or-buy decision?

There are different factors that influence the make-or-buy decision and these include the core abilities of the team or organization, the value delivered by the vendors meeting the needs of the buyer, risks that are associated with the meeting and the internal capability compared with the vendor community.

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What would be the qualitative factors to be considered by the management in a make versus buy decision?

Examples of the qualitative factors in make-or-buy decision are: control over quality of the component, reliability of suppliers, impact of the decision on suppliers and customers, etc. The quantitative factors are actually the incremental costs resulting from making or buying the component.

What do you 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.

What is make buy decision explain with examples?

A Make or Buy Decision is a decision made to either manufacture a product/ service in house or buy it from outside suppliers (outsourcing) based on cost-benefit analysis.

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.

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 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.

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What are three factors that can be considered in the make or buy process?

The decision as to whether to make vs. buy a product is based on a variety of factors, including the cost of either option, whether the product is available from other vendors, the expertise and resources your business has when it comes to manufacturing, and whether you have enough cash in place to make a purchase.

What to consider when buying products?

5 Factors Consumers Consider When Choosing Your Product

  • Package Reusability. Consumers have always wanted more for their money, but modern consumers want environmental responsibility for their money, as well.
  • Product Allure. Make the product look good.
  • Familiarity.
  • Snobocity.
  • Brand Trustworthiness.

Which factors affect the make buy or lease decision?

To evaluate whether or not you’re getting a good deal, focus on the four factors that determine how much money you will end up spending, says Reed. Those factors are the monthly payments, the length of the lease, the down payment, and the mileage restrictions on the lease contract.

What are quantitative and qualitative factors in decision making?

What are the qualitative and quantitative factors in decision making? Quantitative decisions are mostly based on statistical analysis of collected data whereas qualitative decisions are based on many algorithms like type and quality of data, factors that influence collected data, risk assessments etc.

What are qualitative factors in decision making?

Qualitative factors are decision outcomes that cannot be measured. Examples of qualitative factors are: Morale. The impact on employee morale of adding a break room to the production area.

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Which is the first step in the management decision making process?

The first step in making the right decision is recognizing the problem or opportunity and deciding to address it. Determine why this decision will make a difference to your customers or fellow employees.

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