Sam's company can either make the components or buy them. He should decide to buy components from a supplier (as opposed to making them):
A) when his plant has excess plant capacity.
B) when buying the components will require greater flexibility on the firm's part to accommodate the supplier.
C) if product quality would be the same (regardless of the firm's decision).
D) if the risk of equipment obsolescence can be transferred to the supplier.

Question

Quizplus · Accepted Answer

By buying components from a supplier, Sam can transfer the risk of equipment obsolescence to the supplier. This way, Sam's company will not have to worry about technology changes and can focus on their core competencies.

Sam's Company Can Either Make the Components or Buy Them