1. “To produce or not to produce ?” That is the real question

2. LOOK AT THE SHORT LIST BELOW – ALL OF WHICH ARE PRODUCTS THAT THE SCHOOL OFFERS, SOME WE ‘BUY’ SOME WE ‘MAKE’ – IDENTIFY WHICH ARE WHICH AND THEN TRY JUSTIFY EACH. I have used the school as an example because it is the business we are all familiar with, but it is not the best. We will do more later on.

3. Deciding whether to ‘make’ or ‘buy’ is a decision and therefore any of the relevant Decision making tools studied earlier can and should be used eg Eg investment appraisals, breakeven analysis, ishikawa fishbone, decision tree, SWOT PEST, Lewin Force Field, Cost Benefit Analysis.. etc In particular though for quantitative purposes we create 2 simple formulaes COST TO BUY := Price x Quantity And then we compare that with COST TO MAKE := [total] Fixed Costs + Total Variable Costs Variable Cost per unit x # of units And if CTB > CTM, then we seriously consider the MAKE option, and vice versa Some Case Studies p 280 - 282