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

question 128

Multiple Choice

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.

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Definitions:

Tsunami

A series of ocean waves with extremely long wavelengths caused by large-scale disturbances such as earthquakes, volcanic eruptions, or underwater landslides.

Recurrence Intervals

The average time between events such as earthquakes, floods, or volcanic eruptions, used in risk assessment and planning.

Prehistoric Earthquakes

Earthquakes that occurred before historical records were kept, studied primarily through geologic evidence.

Seismic Events

Phenomena that are caused by the sudden release of energy in the Earth's crust, resulting in ground shaking and sometimes displacement.