Question

derek is the production head at an automobile company. he is in complete charge of deciding if his company should make or buy a particular component part. which of the following should derek ideally do first? question 7answer a. he should research and gather information on the available vendor options in the industry. b. he should decide the course of action he and his team should take to arrive at the ultimate decision in dealing with the issue. c. he should generate as many potential alternatives or solutions as possible to help solve his problem. d. he should determine the objective, stating clearly and specifically what he wants the end result to be.

Answer 1

Derek should first determine the objective before making a decision on whether to make or buy a component. Clarity in objectives guides subsequent decisions and helps mitigate risks associated with imperfect information.

Step-by-step explanation:

Derek, as the production head at an automobile company, should ideally determine the objective first. Before he decides if his company should make or buy a particular component, it is crucial to state clearly and specifically what the end result should be. This clarity will guide the subsequent steps of researching and gathering information on vendor options, generating potential alternatives, and deciding on the best course of action.

In the context of a world of imperfect information, such as the hypothetical scenario with Marvin purchasing a car, sellers may have an incentive to conceal information about the product's shortcomings. Therefore, Derek must also be vigilant about information asymmetry when evaluating vendors or deciding to manufacture in-house. Defining clear objectives, therefore, helps in designing an evaluative framework that mitigates risks associated with hidden information.