Make-Buy, Outsourcing & Network Design worked example

Network Inventory Impact at 29% share of inventory added by the design change: a worked example

Here is what the math looks like when conditions slip. We hold every other input steady and drop share of inventory added by the design change to 29%, then walk the calculation through step by step. Estimates the annual inventory cost impact of a network design from incremental carrying cost plus expedite and obsolescence exposure.

The inputs for this scenario

  • Average inventory units held in network: 65,000 units (held at the documented default)
  • Annual carrying cost per unit: 9.5 $/unit/yr (held at the documented default)
  • Share of inventory added by the design change: 29 % (the input this scenario stresses; the baseline uses 40)
  • Expedite and obsolescence write-off buffer: 55,000 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Inventory impact = average units x carrying cost x design-added share + write-off buffer.
  • Total network inventory impact cost works out to 234,075 $ at these inputs, and this is the headline figure for the scenario.
  • Network inventory impact cost per unit works out to 3.6 $ / piece at these inputs.
  • Variable network inventory impact cost works out to 179,075 $ at these inputs.
  • Fixed network inventory impact adder works out to 55,000 $ at these inputs.

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 22.49% below the baseline at 234,075 $.
  • The practical read: the gap between this scenario and the baseline is entirely attributable to share of inventory added by the design change, so recovering it is worth quantifying in dollars before considering equipment or staffing changes. It uses an average inventory level and a flat carrying rate, so it won't capture seasonal swings or the way carrying cost rises non-linearly as obsolescence risk climbs.

Results at a glance

  • Total network inventory impact cost: 234,075 $ (headline result)
  • Network inventory impact cost per unit: 3.6 $ / piece
  • Variable network inventory impact cost: 179,075 $
  • Fixed network inventory impact adder: 55,000 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Network Inventory Impact calculator, set share of inventory added by the design change to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.