To make or to buy, that is the question. This is a decision that the restaurant needs to thoroughly examine and analyze. Factors such as the cost, quality and customer perception will be looked into.
It is highly recommended that the restaurant buy chocolate chip cookies from a bakery goods company than to make the cookies in the restaurant. It has been found that it is less expensive to buy the cookies after the costs in making or buying the cookies have been computed and compared and after all other factors were considered and analyzed.
The following steps were taken before coming up with the abovementioned recommendation.
Step one consists of identifying the costs of making or buying. This step is further broken down to converting the measurements of the ingredients of the chocolate chip cookies to the corresponding weights of the ingredients on the AP price list and computing the cost of the ingredients. Since the measurements of the ingredients are in cups and teaspoons, it is necessary to convert them to corresponding weights in pounds or ounces. So, to make six dozen cookies, the following ingredients with their equivalent cost based on the AP price list are needed: 1 lb butter costs $ 1.16, 1 lb white sugar costs $ .38, 1 lb brown sugar costs $ .48, 4 eggs cost $ .40, 1 lb oats costs $ 1.50, 16 oz cornflakes cost $ 3.20, 1 lb flour costs $ .20, 1/48 lb baking powder costs $ .0056, 1/48 lb baking soda costs $ .005, 1/192 lb salt costs $ .0005, 1/48 pint vanilla cost .135, 12 oz shredded coconut cost $2.27, 16 0z raisins cost $2.00, 16 0z chocolate chips cost $ 5.33, and 12 oz chopped walnuts cost $ 4.54. This amounts to $ 21.60. In addition to this, the labor cost of a part-time employee per hour with no benefits is $ 7.50 with which six dozen cookies can be made. This means that the total cost for making six dozen cookies will be $ 29.10. When this cost is compared with the cost of buying six dozen chocolate chip cookies which is only $ 15.00 from a bakery goods company, the restaurant will be able to save approximately $14.10. Thus it is more expensive to make the cookies than to buy it from another company.
Step two involves determining the availability of materials, manpower and equipment. It is not enough that only the cost of materials will be considered in a buy-or-make decision. It also necessary to determine if the materials or ingredients are readily available, if the manpower will also be available when needed as well as the equipment is already in place. As for the ingredients, there might be times when probable problems as to buying them will occur especially that this dependent on the suppliers. There might also be problems in the availability of the part-time employee. Since the employee is only part-time and he might have other jobs outside of the company, this might cause problems later on. As for the equipment, there is at least no problem because this is already in place and always ready to be used inside the kitchen.
Step three consists of considering other factors such as quality control, customer preference, transportation costs and expertise of personnel. When the cookies will be made in-house, there is direct quality control and the quality is ensured. There will also be additional transportation costs in buying the ingredients and the expertise of the personnel will be monitored. Meanwhile if the cookies will be bought outside, there is no direct quality control thus, the quality is not also ensured. There will be no transportation expenses if the cookies will be delivered right to the restaurant. Aside from this, the expertise of the personnel in the bakery Goods Company is considered to be found considering it is a large company.
In conclusion, it is better to buy the cookies outside than to make it in-house because it is more expensive and it entails additional transportation costs and other factors mentioned above.
Inman, R. A. Make-or-Buy Decisions. Reference for Business. Retrieved May 29, 2008 from http://www.referenceforbusiness.com/management/Log-Mar/Make-or-Buy-Decisions.html