Question

In a make or buy (outsourcing) decision, which one of the following considerations is irrelevant?

		When we resell the leftover part, it is more beneficial to sell to Company X  rather than Company Y.
		If we make the part, we do not have to worry about the quality of the part or delivery time.
		If we buy the part, we have to rely on other guys for a very important part.
		If we buy the part from outside, our fixed expenses will drop by half.
		If we buy the part, we can rent our existing production facilities for $600,000.

Answer 1

Ans :

In make or buy decision we have to consider the following things or we must keep in mind the following before jumping into a conclusion-

1-Quality considerations

2-Quantity considerations

3-Cost considerations

4-Service considerations

5-Competence of know-how required

6-Age of the firm

7-Tax considerations

8-Labour union compulsions

9-Emotional Considerations

10-Sub-contracting

By analyzing above we can say that When we resell the leftover part, it is more beneficial to sell to Company X  rather than Company Y is irrelevant in taking the decision.

Note: I can give a detailed explanation of the point mentioned but is make the answer more complicated as the question is simple and straight forward.Thanks