Make-Buy, Outsourcing & Network Design worked example

Network Inventory Impact at 46% share of inventory added by the design change: a worked example

Push share of inventory added by the design change up to 46% and the picture changes. This example computes every intermediate figure at that operating point. Use it when a make-buy or footprint change shifts where stock sits and you need to price the resulting inventory burden.

The inputs for this scenario

  • Average inventory units held in network: 65,000 units (unchanged)
  • Annual carrying cost per unit: 9.5 $/unit/yr (unchanged)
  • Share of inventory added by the design change: 46 % (raised for this scenario; the documented default is 40)
  • Expedite and obsolescence write-off buffer: 55,000 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Inventory impact = average units x carrying cost x design-added share + write-off buffer) to the inputs above produces each figure below.
  • At this operating point the engine returns 339,050 $ for total network inventory impact cost, the number this scenario is built around.
  • At this operating point the engine returns 5.22 $ / piece for network inventory impact cost per unit.
  • At this operating point the engine returns 284,050 $ for variable network inventory impact cost.
  • At this operating point the engine returns 55,000 $ for fixed network inventory impact adder.

How this compares with the baseline

  • Against the tool's baseline example, where share of inventory added by the design change sits at 40% and the headline result is 302,000 $, this scenario comes in 12.27% above the baseline at 339,050 $.
  • It computes the annual carrying cost attributable to a design or network change plus a fixed expedite-and-obsolescence buffer. 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 network inventory impact cost: 339,050 $ (headline result)
  • Network inventory impact cost per unit: 5.22 $ / piece
  • Variable network inventory impact cost: 284,050 $
  • Fixed network inventory impact adder: 55,000 $

Run it with your numbers

  • Every input above is editable in the live Network Inventory Impact calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.