Chapter 12, Problem 2DQ

Explanation of Solution

Make-or-Buy decision process and performing financial calculations in the Lease-or-Buy example:

• Make-or-Buy decision process is a strategic decision in the procurement function.
• In a Make-or-Buy decision process, the organization decides to carry out certain activities to deliver services or product, within the organization or hire a third party to do the same.
• It includes careful cost estimation for delivering a product and comparing them with the relevant cost after outsourcing this operation.
• Consider the example of Lease-or-Buy,  if buying an equipment for a project of price $12,000, with a daily operational cost of $400, if incase we can even lease the same piece of equipment for $800 per d...