Professional Documents
Culture Documents
Vertical Integration
a measure of how much of the supply chain is
owned and operated by the manufacturer.
Outsourcing
a practice used by different companies to reduce
costs by transferring portions of work to suppliers
rather than completing it internally.
Other Jargons
Backward Integration
a business strategy that involves the purchase
of, or merger with, suppliers up the supply chain.
Forward Integration
a business strategy whereby business
activities are expanded to include control of the direct
distribution or supply of a company’s products.
Advantages of Make or Buy
Analysis
•Saving Money
•Staying Flexible
•Quality Control
TCBuy $25000
Insourcing vs Outsourcing
$14000 $0.25Q
.
$0.25 $0.25
56000 Q
Insourcing vs Outsourcing
The quantity to which Mary and
Sue would get the same profit is 56000
bagels. So if Mary and Sue wanted to
buy bagels and earn more profit, they
must buy a quantity lower that 56000
but if they wanted to make bagels and
make more profit, they must produce a
quantity higher than 56000.
Other Factors to Consider