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Response To Case Studies

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Running head: ANALYSING CASE STUDIES Analysing case studies Student’s name Course number- name of course Instructor’s name Date 1 2 ANALYSING CASE STUDIES Teloxy Engineering (A) Total expected value to make or buy the component includes; Make Set up cost $100,00 Material cost $400,000 Buy Repair cost @14.3% of $171,600 $1,200,000 Total $671,600 $720,000 Computing for defective cost, take percentage defective multiplied by the probability of occurrence. Considering the expected values of the options buy and make, it would be best to make the component rather than buy since making has a lower expected cost as opposed to the high buying price. Therefore, Teloxy Engineering Company can opt to make the new product if they base their decision on the expected cost. However, the company’s decision on whether to buy or make a particular product may not be based entirely on the economic view. Other determining factors are considered. For instance, the quality of the product is a vital determining factor that influences the decision of whether to buy or make a particular product (Arya et al., 2008). Customer’s satisfaction is a crucial factor, offering quality product becomes a primary focus for the company and may opt to buy a product from experts rather than produce a defective product. For example, in the Teloxy engineering (A) case study, the company may choose to incur the extra cost to purchase a quality product rather than make a defective one. 3 ANALYSIN ...
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