ExamGecko
Question list
Search
Search

List of questions

Search

Question 490 - CSCP discussion

Report
Export

When deciding whether to make a component internally or to outsource production, a company must:

A.
evaluate the landed cost of the component.
Answers
A.
evaluate the landed cost of the component.
B.
select the lowest-price source.
Answers
B.
select the lowest-price source.
C.
outsource only low-value components.
Answers
C.
outsource only low-value components.
D.
select the source with the shortest lead time.
Answers
D.
select the source with the shortest lead time.
Suggested answer: A

Explanation:

When deciding whether to make a component internally or to outsource production, evaluating the landed cost of the component is crucial. Here's the rationale:

Comprehensive Cost Assessment: Landed cost includes the total cost of a product once it has arrived at the buyer's doorstep, encompassing purchase price, shipping, customs, duties, taxes, insurance, currency conversion, and handling fees.

Informed Decision-Making: By evaluating the landed cost, a company can compare the true cost of internal production versus outsourcing, ensuring a comprehensive analysis that includes all hidden and indirect costs.

Cost Efficiency: Understanding the landed cost helps in making cost-efficient decisions that consider not just the immediate purchase price but all associated costs, leading to better financial outcomes.

Ellram, L. M., Tate, W. L., & Billington, C. (2008). Offshore outsourcing of professional services: A transaction cost economics perspective. Journal of Operations Management.

Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation. Pearson.

asked 16/09/2024
Ali Alaqoul
34 questions
User
Your answer:
0 comments
Sorted by

Leave a comment first