Final answer:
Opportunity cost is the value of the next best alternative that is forgone when making a choice. In a make-or-buy decision, opportunity cost is relevant because it considers the value of the alternative use of resources.
Step-by-step explanation:
Opportunity cost is the value of the next best alternative that is forgone when making a choice. It is the cost of what is given up in order to obtain something else. In a make-or-buy decision, opportunity cost is relevant because it considers the value of the alternative use of resources.
For example, if a company is deciding whether to make a product in-house or buy it from a supplier, the opportunity cost would be the potential profit or benefits that could have been obtained from using those resources for another purpose.
Considering opportunity cost helps organizations evaluate the trade-offs and make informed decisions based on the value of the forgone alternatives.