Answered Essay: Sourcing a product overseas may have: Lower product cost and will generally incur a lower inbound

Sourcing a product overseas may have: Lower product cost and will generally incur a lower inbound transportation cost. Higher product cost and will generally incur a higher inbound transportation cost. Higher product cost but will generally incur a lower inbound transportation cost. Lower product cost but will generally incur a higher inbound transportation cost.

Expert Answer

Q9) Sourcing a product overseas may have –

d) Lower product cost but will generally incur higher inbound transportation cost.

The strategic decision regarding manufacturing(making) product in-house or sourcing (buying) the product from external supplier for a product is taken by a firm depending on the below factors –

i) Overall suppy chain costs viz. transportation costs, manufacturing costs,

ii) Availability of manufacturing facilities,equipment and skilled resources to make the product

iii) Reliable supplier base to supply the products

iv) Lack of technology to manufacture the product

Regarding costs, transportation costs would be on the higher side compared to the product cost as the product needs to be shipped from the supplier to the manufacturer.

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