When evaluating a make-or-buy decision, which of the following does NOT need to be considered?
A)alternative uses of the production capacity
B)the original cost of the production equipment
C)the quality of the supplier's product
D)the reliability of the supplier's delivery schedule

Question

Quizplus · Accepted Answer

The original cost of the production equipment is irrelevant in a make-or-buy decision as it is a sunk cost that has already been incurred. The focus should be on the relevant costs of production and any potential cost savings or benefits of buying from a supplier. Alternative uses of production capacity, quality of the supplier's product, and reliability of the supplier's delivery schedule are all important factors to consider in a make-or-buy decision.

When Evaluating a Make-Or-Buy Decision, Which of the Following Does