Make-Buy, Outsourcing & Network Design worked example

Dual-Site Production Cost at 110% volume exposed to the dual-site premium: a worked example

Push volume exposed to the dual-site premium up to 110% and the picture changes. This example computes every intermediate figure at that operating point. Use it when evaluating whether the supply resilience of a second source justifies the efficiency loss of splitting production.

The inputs for this scenario

  • Total annual units split across two sites: 200,000 units/yr (unchanged)
  • Per-unit cost premium of running two sites: 1.8 $/unit (unchanged)
  • Volume exposed to the dual-site premium: 110 % (raised for this scenario; the documented default is 100)
  • Duplicate tooling and fixed overhead: 320,000 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Dual-site cost = annual units x per-unit premium x exposed share + duplicate fixed cost) to the inputs above produces each figure below.
  • At this operating point the engine returns 716,000 $ for total dual-site production cost, the number this scenario is built around.
  • At this operating point the engine returns 3.58 $ / piece for dual-site production cost per unit.
  • At this operating point the engine returns 396,000 $ for variable dual-site production cost.
  • At this operating point the engine returns 320,000 $ for fixed dual-site production cost adder.

How this compares with the baseline

  • Against the tool's baseline example, where volume exposed to the dual-site premium sits at 100% and the headline result is 680,000 $, this scenario comes in 5.29% above the baseline at 716,000 $.
  • It computes the annual cost penalty of producing a part in two sites by adding a per-unit premium on the exposed volume to the duplicate tooling and fixed overhead. The value of this scenario is the size of the gap it exposes: that gap, priced out over a year, is the budget you can justify spending to close it.

Results at a glance

  • Total dual-site production cost: 716,000 $ (headline result)
  • Dual-site production cost per unit: 3.58 $ / piece
  • Variable dual-site production cost: 396,000 $
  • Fixed dual-site production cost adder: 320,000 $

Run it with your numbers

  • Every input above is editable in the live Dual-Site Production Cost calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.