Which term is used for evaluating the decision to produce in-house versus outsource?

• A. Insourcing
• B. Outsourcing
• C. Make-or-Buy Decision
• D. Lead Factory

Answer: (C)

Make-or-buy decision is the evaluation framework used to decide whether to produce in-house or outsource. It weighs costs, capabilities, and strategic factors to determine which option delivers the needed performance at the lowest total cost and risk. Considerations include unit and fixed costs, current capacity, potential to scale, quality control, lead times, supplier reliability, and whether the activity fits the company’s core skills and long-term plan. The goal is to balance cost with control and strategic aims, choosing the path that strengthens the business overall. Insourcing, while related, refers to bringing work back in-house after outsourcing; outsourcing is the act of contracting work out, not the decision framework; lead factory is not the standard term for this decision.