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You are considering whether to buy or make a software product: • If you buy, the cost is $,, and the cost of procurement and integrating in your company is $1, • If you want to make it yourself, the product will require seven software engineers working three months. Salary of each software engineer is $4, per month. The overhead costs apportioned to the project will be $2,.
Which option will you choose—make or buy?
Answer: If you buy, cost will be: $, + $1, = $, If you make, cost will be: $4, x7 x3 + $2, = $, So, it is better for you to buy.
International trainer ENG . Hassan Shalaby
Having planned production for over line items ... granted we had the machines, acquired some other machines and RM's do to a merger or rather bought an other business.
I set up product structure which included the overhead (man hours, material, machine time and down time, inventory space ...)
At the end we saved on making the product, could meet special order deadlines, no additional charges for transport ... amortization of the acquired machinery ... it made sense to manufacture ...
When we sold the machinery I bought the item from the same vendor which sold us the RM and we had now lead times6-8 weeks (prior1-2 days). the cost of monitoring the inventory and special orders for large qty's for one or two customers... it made sense at that time, since we did needed the space for bigger money makers.....
The answer is yes and no ...
All depends what you have and what your needs are. ... waying off the pro's and cons ...
you want to keep manufacturing status in your business, then you should manufacture ...
if this is not important to you than you and want to fall under warehousing and distribution than ordering in might be better for you.
If you only buy this item once or twice a year and you do not want the machines on your books .... outsource /purchase by all means..
Thanks for information --------------------------
Thank you for useful information & invitation.
Thanks for the invitation. Useful Information.
Factors that may influence a firm's decision to buy a part rather than produce it internally include a lack of in-house expertise, small volume requirements, a desire for multiple sourcing and the fact that the item may not be critical to the firm's strategy. Additional consideration may be given if the firm has the opportunity to work with a company that has previously provided outsourced services successfully in the past and can sustain a long-term relationship.
Thanks for the invitation !
Thank you for the invitation
Each greeting to everyone on the benefit and enrichment of informational
Thank you for the invitation and sharing the information.
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