In a Make-Or-Buy Decision, If the Product Is Modular and the Company

question 26

Multiple Choice

In a make-or-buy decision, if the product is modular and the company is dependent on knowledge and capacity, outsourcing most likely will be:

• A) company policy
• B) viewed as a way to reduce costs
• C) considered necessary
• D) considered risky

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Definitions:

Reorder Points

The inventory level at which an order must be placed to replenish stock before it runs out, ensuring optimal inventory levels.

Inventory Costs

Costs associated with holding and managing inventory, including storage costs, insurance, depreciation, and potential obsolescence, crucial for supply chain and operations management.

Safety Reserves

Financial or physical assets kept on hand as a precautionary measure to cover unexpected expenses or emergencies.

Shortage Cost

The cost incurred from the inability to satisfy demand for a product or service due to insufficient resources or supply.