Make-Buy, Outsourcing & Network Design worked example

Dual-Site Production Cost at 72% volume exposed to the dual-site premium: a worked example

Suppose volume exposed to the dual-site premium falls to 72%. This page works the full calculation at that level so you can see exactly which result moves and by how much. Estimates the annual cost penalty of running the same product across two plants from lost scale economies and duplicated tooling and overhead.

The inputs for this scenario

  • Total annual units split across two sites: 200,000 units/yr (held at the documented default)
  • Per-unit cost premium of running two sites: 1.8 $/unit (held at the documented default)
  • Volume exposed to the dual-site premium: 72 % (the input this scenario stresses; the baseline uses 100)
  • Duplicate tooling and fixed overhead: 320,000 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Dual-site cost = annual units x per-unit premium x exposed share + duplicate fixed cost.
  • Total dual-site production cost works out to 579,200 $ at these inputs, and this is the headline figure for the scenario.
  • Dual-site production cost per unit works out to 2.9 $ / piece at these inputs.
  • Variable dual-site production cost works out to 259,200 $ at these inputs.
  • Fixed dual-site production cost adder works out to 320,000 $ at these inputs.

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 14.82% below the baseline at 579,200 $.
  • 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. When the numbers land here, the stressed input is the lever to work; the walkthrough above shows exactly how much each output recovers as it climbs back toward the baseline.

Results at a glance

  • Total dual-site production cost: 579,200 $ (headline result)
  • Dual-site production cost per unit: 2.9 $ / piece
  • Variable dual-site production cost: 259,200 $
  • Fixed dual-site production cost adder: 320,000 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Dual-Site Production Cost calculator, set volume exposed to the dual-site premium to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.