Make-Buy, Outsourcing & Network Design worked example
Regional Production Savings at 86% share of units realizing the saving: a worked example
Push share of units realizing the saving up to 86% and the picture changes. This example computes every intermediate figure at that operating point. Use it when evaluating near-shoring or in-region production to cut freight, duty, and lead time on a program.
The inputs for this scenario
- Annual units made in-region: 150,000 units/yr (unchanged)
- Landed cost saved per unit: 3.2 $/unit (unchanged)
- Share of units realizing the saving: 86 % (raised for this scenario; the documented default is 75)
- Regional ramp and qualification cost: 90,000 $ (unchanged)
Working through the calculation
- Applying the documented formula (Net regional benefit = annual units x landed saving x captured share + ramp cost) to the inputs above produces each figure below.
- At this operating point the engine returns 502,800 $ for total regional production savings cost, the number this scenario is built around.
- At this operating point the engine returns 3.35 $ / piece for regional production savings cost per unit.
- At this operating point the engine returns 412,800 $ for variable regional production savings cost.
- At this operating point the engine returns 90,000 $ for fixed regional production savings adder.
How this compares with the baseline
- Against the tool's baseline example, where share of units realizing the saving sits at 75% and the headline result is 450,000 $, this scenario comes in 11.73% above the baseline at 502,800 $.
- It computes the annual net benefit of regional production from per-unit landed savings, the share captured, and the one-time ramp cost. 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 regional production savings cost: 502,800 $ (headline result)
- Regional production savings cost per unit: 3.35 $ / piece
- Variable regional production savings cost: 412,800 $
- Fixed regional production savings adder: 90,000 $
Run it with your numbers
- Every input above is editable in the live Regional Production Savings calculator, which recalculates instantly and can be shared with the inputs intact.
Last reviewed 2026-05-12.