# Decide whether to make a part in-house or buy it

A make-vs-buy comparison of full costs, capacity, capability, and strategic risk with a clear recommendation.

- Topic: Thinking & Decisions
- Framework: RTF
- Level: Standard
- Tags: Fill-in Template
- Source: https://www.thinkwithprompt.com/prompts/decide-whether-to-make-a-part-in-house-or-buy-it

## Prompt

```text
Help me decide whether to make a part or service in-house or buy it from a supplier.

**What it is and annual volume:** [ITEM, VOLUME, EXPECTED GROWTH]
**Buy option:** [SUPPLIER QUOTES, LEAD TIME, MOQ, QUALITY HISTORY]
**Make option:** [MATERIAL COST, LABOR HOURS AND RATE, MACHINE TIME, SETUP, SCRAP RATE]
**Capacity:** [DO WE HAVE SPARE CAPACITY, OR WOULD WE NEED NEW EQUIPMENT, SPACE, OR HIRES?]
**Investment needed to make:** [EQUIPMENT, TOOLING, TRAINING, QUALIFICATION]
**Strategic factors:** [IS IT CORE IP? A DIFFERENTIATOR? SUPPLY SECURE? QUALITY-CRITICAL?]
**Decision horizon:** [e.g. 3 or 5 years]

Steps:
1. Compare costs properly: for make, separate truly incremental costs from allocated fixed overhead that won't change either way (a common mistake that makes "make" look worse or better than it is).
2. Include the buy-side costs often missed: freight, incoming inspection, supplier management, inventory.
3. Compute payback on any investment and the break-even volume.
4. Weigh non-cost factors: capability, control of IP, flexibility, supply risk, opportunity cost of the capacity.
5. Consider hybrid options (make base volume, buy peaks; buy now, revisit at a volume trigger).

Use only my numbers; mark assumptions [ASSUMPTION] and missing data [ADD].

Return:
1. A cost table: Element | Make | Buy (per unit and annual).
2. Break-even volume and payback period.
3. A scored comparison of strategic factors.
4. My recommendation, the conditions that would change it, and the next steps to validate.
```

## What to fill in

- ITEM, VOLUME, EXPECTED GROWTH
- SUPPLIER QUOTES, LEAD TIME, MOQ, QUALITY HISTORY
- EQUIPMENT, TOOLING, TRAINING, QUALIFICATION
- e.g. 3 or 5 years
- ASSUMPTION
- ADD

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