Fixed cost, marginal cost, and the decision to buy or make
Charles E. Hegji
Additional contact information
Charles E. Hegji: Auburn University, Montgomery, USA, Postal: Auburn University, Montgomery, USA
Managerial and Decision Economics, 2004, vol. 25, issue 3, 137-140
Abstract:
The paper builds a formal model of the costs and benefits of producing intermediate goods internally as compared to buying partially produced inputs on the open market. The model centers on the link between the purchase of assets specific to a production process and the mean and variance of profits from the purchase. The central point of the paper is that even though purchases of assets specific to a production process can have an ambiguous impact on profits of the decision to make, the purchase of such assets has a tendency to reduce the variability of profits. This trade-off is at the heart of decision to buy or make. Copyright © 2004 John Wiley & Sons, Ltd.
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
http://hdl.handle.net/10.1002/mde.1138 Link to full text; subscription required (text/html)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:25:y:2004:i:3:p:137-140
DOI: 10.1002/mde.1138
Access Statistics for this article
Managerial and Decision Economics is currently edited by Antony Dnes
More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().