Make-or-Buy Decisions

Read section 7.2. Best Board's decision is whether or not to make its own wakeboards or buy them from a supplier. Differential analysis requires the identification of all revenues and costs that differ from one alternative to another. In general, managers select the alternative with the highest profit. If the only difference between the alternatives is cost (as in the make-or-buy decision for Best Boards), decision-makers would select the alternative with the lowest cost.