Question

Why should an organization switch from making to buying?

Answer 1

Answer:

Cost considerations (less expensive to make the part)

Desire to integrate plant operations.

Productive use of excess plant capacity to help absorb fixed overhead (using existing idle capacity)

Need to exert direct control over production and/or quality.

Better quality control.

Explanation:

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Answer 2

• 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.

• Make or buy decisions have substantial strategic implications in the entire planning process. They can affect a firm's competitive advantage, and alter the types of alternatives considered in the planning process.

• Top management needs to put these decisions back on their strategic agenda.