Which of the following is not a qualitative factor that Atlas Manufacturing should consider when deciding whether to buy or make a part used in manufacturing their product?

a. Quality of the outside producer’s product.

b. Potential loss of trade secrets.

c. Manufacturing deadlines and special orders.

d. Variable cost per unit of the product.

 

Answer:

Choice "d" is correct. Calculating the costs of production of the part versus buying the part from an outside source is a quantitative factor used by a company to determine the lowest cost alternative.

Choice "a" is incorrect. Whether the outsourced part can be manufactured to the required level of quality is a qualitative factor that Atlas would consider in their decision.

Choice "b" is incorrect. Loss of confidentiality and trade secrets is a qualitative factor to consider when buying outside of the organization.

Choice "c" is incorrect. An outside supplier may not be able to meet specific deadlines or have the same priorities as the purchaser and is a qualitative factor that needs to be considered.