Amacon is a bicycle manufacturer that produces approximately 5,000 bikes each month. In order to meet that demand, Amacon requires the 10,000 rubber tires at its assembly plant on the last Thursday of each month. Explain the answers to the following questions.
a. Estimate the pros and cons of using spot exchange to obtain the tires?
b. Estimate the pros and cons of using a contract to obtain the inputs?
c. Estimate the pros and cons of vertically integrating to obtain the tires?