Create an Excel spreadsheet to conduct a make or buy analysis of the following:

Procurement: Make or Buy?

Whether we are talking about purchasing for project management or operations management, most major purchasing decisions are made only after the completion of a “make-or-buy” analysis. Essentially, is the business able to cost effectively complete the work in-house (make), or would it be more cost effective to outsource the work (buy)?

Don't use plagiarized sources. Get Your Custom Essay on
Create an Excel spreadsheet to conduct a make or buy analysis of the following:
Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT!
Order Essay

When a manufacturer assembles parts to produce a finished product, mangers must first decide whether to make or buy those individual components. Consider a motorcycle. The manufacturer can either make or buy the wheels, seats, gas tanks, etc. used in the finished bike.

When you’re first trying to understand the concept of a Make-or-Buy Analysis, it helps to think of a DIY project you’ve undertaken. I can use the example of an oil change. An oil change for an SUV can cost in excess of $40. On the surface it may seem like the price is not worth it. After all, how much does a few quarts of oil cost, right?

Now let’s really think about everything that needs to happen to successfully change the oil in an SUV. Do you have the know-how to accomplish the job? Do you have the tools needed? Are you willing and able to get under the vehicle? Do you have a means of disposing of the old oil? How much value do you place on your time?

That last question might be one of the most important of all. Chances are good you would say an hour’s worth of your free time is worth at least $40. Since this would likely take an hour plus the expense of oil, tools and disposal, is it really worth doing it yourself?

Create an Excel spreadsheet to conduct a make or buy analysis of the following:

You manage a large multi-national business that manufactures/builds commercial airliners. In an effort to reduce costs, you are considering outsourcing some of the parts used to build the planes. You start with the parts that are used most often. We will call these “A” parts.

The estimated costs of producing 8,000 “A” parts in house are:

Per Unit

Total

Direct Materials

$13

$104,000

Direct Labor

10

80,000

Applied Variable Factory

Overhead

11

88,000

Applied Fixed Factory

Overhead

15

120,000

$49.00

$392,000.00

You can buy this part from a supplier overseas for only $41.49 each. You have never worked with this supplier before, but the price difference appears as if it could save your organization some money.

If you purchased from the supplier, 50% in fixed factory overhead would be saved. (NOTE: Keep in mind that Fixed overhead is overhead you must pay even if the factory is not producing anything!)

Using Excel, perform the calculations necessary to determine if you should make or buy.

Upload your Excel spreadsheet AND in the comments section of the D2L assignment screen, explain what you think you should do based on ALL information available. Is it worth outsourcing this part?

Homework Sharks
Order NOW For A 10% Discount!
Pages (550 words)
Approximate price: -

Our Advantages

Plagiarism Free Papers

All our papers are original and written from scratch. We will email you a plagiarism report alongside your completed paper once done.

Free Revisions

All papers are submitted ahead of time. We do this to allow you time to point out any area you would need revision on, and help you for free.

Title-page

A title page preceeds all your paper content. Here, you put all your personal information and this we give out for free.

Bibliography

Without a reference/bibliography page, any academic paper is incomplete and doesnt qualify for grading. We also offer this for free.

Originality & Security

At Homework Sharks, we take confidentiality seriously and all your personal information is stored safely and do not share it with third parties for any reasons whatsoever. Our work is original and we send plagiarism reports alongside every paper.

24/7 Customer Support

Our agents are online 24/7. Feel free to contact us through email or talk to our live agents.

Try it now!

Calculate the price of your order

We'll send you the first draft for approval by at
Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

We work around the clock to see best customer experience.

Pricing

Flexible Pricing

Our prces are pocket friendly and you can do partial payments. When that is not enough, we have a free enquiry service.

Communication

Admission help & Client-Writer Contact

When you need to elaborate something further to your writer, we provide that button.

Deadlines

Paper Submission

We take deadlines seriously and our papers are submitted ahead of time. We are happy to assist you in case of any adjustments needed.

Reviews

Customer Feedback

Your feedback, good or bad is of great concern to us and we take it very seriously. We are, therefore, constantly adjusting our policies to ensure best customer/writer experience.