In a make or buy decision, management should consider: (Check all that apply.)Multiple select question.Existing salesSunk costsWorkloadIncremental costsEmployee moraleproduct quality
Question
In a make or buy decision, management should consider: (Check all that apply.)Multiple select question.Existing salesSunk costsWorkloadIncremental costsEmployee moraleproduct quality
Solution
In a make or buy decision, management should consider:
-
Existing sales: This is important as it gives an idea of the demand for the product. If sales are high, it might be more cost-effective to make the product in-house. If sales are low, it might be cheaper to buy the product from a supplier.
-
Sunk costs: These are costs that have already been incurred and cannot be recovered. While they should not influence the decision (as per the principle of sunk cost fallacy), they often do.
-
Workload: If the company's workforce is already overburdened, it might be better to buy the product. If there is spare capacity, it might be better to make the product.
-
Incremental costs: These are the additional costs that would be incurred if the product were made in-house. They include the cost of materials, labor, and additional overheads.
-
Employee morale: If making the product in-house would lead to overwork and a drop in employee morale, it might be better to buy the product. Conversely, if employees would feel more engaged and motivated by the challenge of making the product, it might be better to make it.
-
Product quality: If the company can make a higher quality product than what is available from suppliers, it might be better to make the product. If suppliers can provide a higher quality product, it might be better to buy it.
Similar Questions
Multiple Select QuestionSelect all that applyIn a make or buy decision, management should consider: (Check all that apply.)Multiple select question.Existing salesproduct qualitySunk costsIncremental costsWorkloadEmployee morale
Multiple Select QuestionSelect all that applyWhen making sell or process decisions, management should consider: (Check all that apply.)Multiple select question.costs already incurred in producing partially completed products.incremental costs of processing further.existing sales.revenue from selling as is.revenue from selling after further processing.
Multiple Select QuestionSelect all that applyWhen evaluating special offer decisions, management should consider: (Check all that apply.)Multiple select question.sunk costs.incremental costs.existing sales.available capacity.historical costs.incremental revenues.
Multiple Select QuestionSelect all that applyWhen making keep or replace decisions, management should consider the: (Check all that apply.)Multiple select question.variable manufacturing cost of the new equipmentoriginal cost of the existing equipmentsale of the existing equipmentvariable manufacturing cost of the existing equipmentbook value of the existing equipment
Select all that applyWhen setting price, a company must consider many factors including the costs of:Multiple select question.productionpromotionorganization structuredistribution
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.