Question

Which of the following is not a qualitative factor to be considered in a make-or-buy decision? Supplier’s ability to meet production schedule. Possible lost jobs from buying outside. Incremental benefit from buying outside. Supplier’s ability to satisfy quality standards.

Answer 1

Answer:

Incremental benefit from buying outside

Explanation:

A decision will always need one to consider qualitative and non-qualitative (also known as quantitative) effects of a decision before choosing the best alternative.

Qualitative factors are those effects of a decision that do not have a monetary measurement to it.

Quantitative factors are those effects of a decision that have a monetary measurement that can be calculated from it.

Incremental benefit from buying outside is the only option that is not qualitative as the increment is determined by comparing the cost of making Internally against the cost of purchasing outside from a supplier.

Answer 2

Answer: Incremental benefit from buying outside.

Explanation: Decisions to either manufacture, produce one's product / spare parts or make purchases of such product or part from another seller are usually based on one of qualitative, quantitative or both consideration.

Decisions made in a make-or-buy scenario which is attached to financial or cost related constraints are usually termed as quantitative while those that aren't related to Monetary or cost constraint are regarded as qualitative.

Evaluating the options above, only incremental benefit from buying outside highlights consideration in terms of cost benefit which compares cost of production to cost of purchase.