A case-based reasoning approach to the make or buy decision

Abstract

Discusses a hybrid computer‐based system designed to assist companies in the make or buy decision, which is arguably the most fundamental component of manufacturing strategy. The system employs both case‐based reasoning (CBR) and decision support system components including multi‐attribute analysis (MAA) and sensitivity analysis. As part of the development process, interviews were conducted with managers in ten multinational companies in order to determine current make or buy practice and elicit opinions on how the decision‐making process would be enhanced. The consensus was that a formal structure was needed along with computerised support at various stages in the process. The model was developed conceptually from the analysis of these interviews with procurement managers and also through a thorough literature survey. The next stage was to implement the most important components of the system to enable feedback from procurement managers in one of the multinationals first interviewed. The results indicate that the system supports the procurement function in evaluating the make or buy decision and has led to enhanced communication with suppliers as well as within the multi‐functional procurement team.