CASE STUDIES IN BUSINESS. MANUFACTURING VERSUS PURCHASING.

MAKE-or-buy decisions; INDUSTRIAL procurement; MACHINE parts; MANUFACTURING processes; MANUFACTURED products; MACHINERY; FACTORY costs; INDUSTRIAL costs; CASE studies; MANUFACTURING industry equipment; MACHINE parts industry

The article presents the dilemma faced by U.S. corporations deciding whether to produce or purchase the materials and parts necessary for production and illustrates the factors companies should consider when making these decisions by means of several case studies. The article addresses the stability of demand, relative costs and quality, stability of supply, and advertising and sales. The article discusses the experiences of the Telton Motor Truck Company, the Atlantis River Foundry Company, and the Galbraith Company. The author concludes that outside purchase makes sense when the demand is small, uncertain and the part is standardized and unimportant in the final product. It makes sense to produce in house when demand is large and increasing and the part is critical to product success.