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8/3/2019 make it or buy it
1/11
By
Charandeep Singh
BBA-II
811
8/3/2019 make it or buy it
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y
Economic considerationyDependent upon many factors
I Make it
1.Location layout2.Capacity
3.Product and production technology
4.Selection of plant and machinery
5.Production control
6.Quality7.Cost
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II Buy it
1. what to buy?
2. How to buy?
3.How much to buy?
4.When to buy?5.Where to buy from?
6.What price to pay?
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y F
or making
1 cost concerns
2 desire to expand the manufacturing focus
3 need of direct control over the product
4 intellectual property concerns
5 quality control concerns
6 supplier unreliability
7 lack of competent suppliers
8 volume too small to get a supplier attracted
9 reduction of logistic costs
10to maintain a backup source
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y For buying
lack of technical experience
suppliers expertise on the technical areas and the
domain
cost considerations
need of small volume
insufficient capacity to produce in house
brand preferencesstrategic partnerships
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y Financial decision
yTechnological aspect
y Marketing aspect
yPurchasing aspect
y Strategically aspect
y Intangible aspect
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y Cost considerations
y Desire to integrate plant operations
y Productive use of excess plant capacity to help absorb fixed overhead
y Need to exert direct control over production and/or quality
y Better quality control
y Design secrecy is require
y Unreliable suppliers
y No competent suppliers
y Desire to maintain a stable workforce
y Quantity too small to interest a supplier
y Control of lead time , transportation and warehousing costy Greater assurance of continual supply
y Provision of a second source
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yPolitical , social or environmental reasons (union pressure)
y Emotion
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y Lack of expertise
y Suppliers research and specialized know-how exceeds that of thebuyer
y Cost considerations (less expensive to buy the item)
y Small-volume requirements
y Limited production facilities or insufficient capacity
y Desire to maintain a multiple-source policy
y Indirect managerial control considerations
y Procurement and inventory considerationsy Brand preference
y Item not essential to the firms strategy
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y Lack of expertise
y Suppliers research and specialized know-how exceeds that of thebuyer
y Cost considerations (less expensive to buy the item)
y Small-volume requirements
y Limited production facilities or insufficient capacity
y Desire to maintain a multiple-source policy
y Indirect managerial control considerations
y Procurement and inventory considerationsy Brand preference
y Item not essential to the firms strategy
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