ABSTRACT
This chapter presents the reasons a company chooses to make a product in house instead of buying it from an external vendor. It deals with the various reasons a company could choose to make an item in house. Several factors need to be accounted for in order to make an intelligent, well informed decision. The chapter also presents a checklist of factors that influence this decision. Two main activities are involved within the realm of the make versus buy decision. They are described as follows: insourcing and outsourcing. In reality, a make versus buy decision is specific to the particular circumstance under consideration. The chapter discusses and demonstrates through actual examples the concept of minimum production volume (MPV). MPV is one of the critical factors that need to be considered in cases wherein unutilized capacity can be put to productive use only through incremental investment in additional pieces of equipment.
