Which of the following would be a valid reason to make a product inhouse, rather than buy it from a supplier?

Which of the following would be a valid reason to make a product inhouse, rather than buy it from a supplier?
A . improved quality control
B . less inventory
C . killset of supplier is higher
D . threat of substitutions

View Answer

Answer: A

Explanation:

One of the biggest advantages to making an item over buying it is ‘improved quality control’. When you make the product yourself, you can set the quality parameters you require and aren’t re-stricted to, or dependant on, what the supplier does. The other options are incorrect- making stuff inhouse would mean you hold more inventory. If the supplier has a higher skillset than you, you would outsource. Threat of substitutions wouldn’t impact this decision.

For a list of pros and cons relating to the ‘make or buy’ decision see p.5. This is a hot topic for the exam.