Albert started a new business that produces household appliances. The business has gathered momentum and has established significant market share. Albert thinks that the cost of making products is expensive and thus started searching for possible suppliers to buy products from and retail them to his own customers. The cost of making Product-A in-house is $240 (i.e., $160 in variable costs and $80 in fixed costs). He found a supplier who offered to sell him Product-A for $180. Albert thinks this offer is absolutely attractive and wants to sign a contract to buy the product. He approached you to give him your opinion on his decision. Do you think his decision is good or bad? Explain your answer by presenting facts in support of your suggestion.

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The decision to buy ProductA from a supplier for 180 instead of making it inhouse for 240 se... View the full answer