Raj's company can either make the components or buy them.In which situation should he decide to make the components rather than buy them from a supplier?
A)When utilisation of plant capacity permits more economical production.
B)When an outside supplier specialises in the production of that component.
C)If in-house operations can concentrate on the business's specialty - the finished product.
D)If the risk of equipment obsolescence can be transferred to the supplier.

Question

Quizplus · Accepted Answer

Raj should decide to make the components rather than buy them from a supplier when utilisation of plant capacity permits more economical production. This means that if the company has spare capacity in its facilities, it can produce the components at a lower cost than what it would have to pay a supplier. This can also help in increasing the company's overall profitability.

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