Make or Buy decisions

Question 1

What is a make or buy decision?

Answer 1

It mean that a business must decide whether to make a product itself or to buy it from another supplier.

Question 2

Rule 1?

Answer 2

If marginal cost of making product in-house is lower than what would be paid to supplier, make itself. VICE VERSA

Question 3

Rule 2?

Answer 3

If marginal cost of making product in-house plus contribution from lost work is lower than price paid to supplier, then make product itself. VICE VERSA

Question 4

Rule 3?

Answer 4

Non-financial aspects should also be considered, such as quality of the product.