Question

A firm must decide whether to make a component part in house or to contract it out to an independent supplier. manufacturing the part requires a non recoverable investment in specialized assets. the most efficient suppliers are located in countries with currencies that many foreign exchange analysts expect to appreciate substantially over the next decade. what are the pros and cons of:

a.manufacturing the component in house and

b.outsourcing manufacturing to an independent supplier which option would you recommend and why?

Answer 1

if the product can b used long it required again and again and manufacturing unit investment is not high then own manufacturing if not order suppliet