Vertical integration provides certain advantages. An integrated company is less dependent on its suppliers and may be able to ensure a smoother flow of parts and materials for production then a non-integrated company.
For example, a strike against a major parts supplier can interrupt the operation of a non integrated company for many months; whereas an integrated company that is producing its own parts might be able to continue operations. Also some company feels that they can control quality better by producing their own parts and materials. And some company feels that buying is better than produce. So they buy the products.
Definition of make or buy decision:
A decision concerning whether an item should be produce internally or perchance from an outsider supplier. Sell or process further decision:
A decision as to weather a joint product be sold at the split of point or sold after further process.
Constraint:
A limitation under which a company must operate, such as limited available machine time or raw material, that’s restricts the company’s ability to satisfy demand.MORE>>>>>>>>>
For example, a strike against a major parts supplier can interrupt the operation of a non integrated company for many months; whereas an integrated company that is producing its own parts might be able to continue operations. Also some company feels that they can control quality better by producing their own parts and materials. And some company feels that buying is better than produce. So they buy the products.
Definition of make or buy decision:
A decision concerning whether an item should be produce internally or perchance from an outsider supplier. Sell or process further decision:
A decision as to weather a joint product be sold at the split of point or sold after further process.
Constraint:
A limitation under which a company must operate, such as limited available machine time or raw material, that’s restricts the company’s ability to satisfy demand.MORE>>>>>>>>>
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