MAKE-OR-BUY DECISION

The act done by a company to choose between manufacturing a product to sell or purchasing it from an external supplier. In this action, here are the two significant factors to consider: qualitative (quality control) and quantitative (such as the relative cost). An enterprise, if it is cheaper to buy than produce or if it does not have adequate capacity to manufacture it, may choose to purchase the product rather than manufacturing it. With the phenomenal surge in global outsourcing in the past decades, this decision is one that managers have to grasp with very frequently.