Make or Buy, Feasibility of Intermediate Good Production
Mark Davis, Scott City, Kan., defended his thesis, “Make or Buy, Feasibility of Intermediate Good Production,” on April 2. 2012. Davis is the General Manager of Scott Pro in Scott City, Kan. He will graduate from Kansas State University in May with a Master of Agribusiness (MAB) degree.
Companies in a manufacturing process often question whether it is better to outsource needed materials or produce the materials in-house. The livestock feed industry is no different. Most producers purchase pre-mixed products to add to feeds at commercial feed mills. For his Master of Agribusiness thesis project, Davis conducted a make or buy feasibility study to determine if it is more profitable to manufacture or purchase these products needed for livestock feed.
“There are several key questions that must be asked before a company can make the make or buy decision,” Davis said. “A few of those questions are: can a company use excess capacity, can the materials be sourced and transported efficiently, and what opportunities are lost by pursuing this option?”
For this project, he analyzed sourcing information for raw materials, market prices for the materials, and estimates of production costs.
Dan O’Brien, Associate Professor of Agricultural Economics and Davis’s thesis advisor, said, “Mark has analyzed a real world agribusiness issue with an applied economic analysis. The results of his thesis work are designed to make a sound investment decision in a competitive market environment. With his experience in the livestock feed ingredient industry, he is positioned to carry out such an analysis and to address the key economic questions involved.”