Buying from an outside supplier to meet project needs is a practice that is rarely used, because it invariably proves to be more expensive than doing the work with resources internal to the organization.

Question

BlackTom AI · Accepted Answer

Make‑or‑buy decisions balance total cost, schedule, risk, and access to capabilities — they are common tools in project management and procurement, so the statement is false.

1. Relevant knowledge points and concepts
- Make‑or‑buy analysis: compares producing internally versus purchasing from suppliers using total cost of ownership (direct labor, overhead, procurement costs, lifecycle costs).
- Core competency: organizations buy when the work is outside their core skills.
- Non‑cost factors: time-to-market, quality, capacity limits, risk transfer, and strategic focus affect the choice.
- Procurement and vendor management: formal processes exist because buying is frequently optimal.

2. Step‑by‑step reasoning
- The statement asserts two absolute claims: that buying is “rarely used” and that it “invariably proves more expensive.” Both absolutes are unrealistic.
- Organizations routinely outsource to gain lower unit costs (economies of scale), specialized expertise, or faster delivery.
- A proper decision uses a cost and risk comparison rather than assuming one option is always more expensive.

3. Illustrative calculation (intermediate steps)
- Suppose internal production: direct labor = $200,000; overhead allocated at 50% = $100,000; tooling & fixed costs amortized = $30,000. Internal total = $200,000 + $100,000 + $30,000 = $330,000.
- Supplier quote: unit price total = $240,000; procurement cost (contracts, inspection) = $10,000. External total = $240,000 + $10,000 = $250,000.
- Comparison: $330,000 (make) versus $250,000 (buy) → buying is cheaper in this scenario.

4. Why the correct answer is correct
- Because outcomes depend on case‑by‑case analysis. Buying is often used and can be cheaper or more strategic. Therefore the blanket assertion that buying is rarely used and always more expensive is incorrect.

5. Why the other option (True) is incorrect
- Marking True would ignore common situations where suppliers offer lower costs, specialized skills, or faster delivery; it would ignore total cost and strategic considerations.

6. Conclusion
- The correct answer is False, which matches the provided answer.

Buying from an outside supplier to meet project needs is a practice that is rarely used, because it invariably proves to be more expensive than doing the work with resources internal to the organization.单项选择题

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