Make-Buy, Outsourcing & Network Design worked example

Regional Production Savings at 54% share of units realizing the saving: a worked example

Suppose share of units realizing the saving falls to 54%. This page works the full calculation at that level so you can see exactly which result moves and by how much. Estimates the annual landed-cost benefit of regionalizing production against the one-time cost of standing up regional supply.

The inputs for this scenario

  • Annual units made in-region: 150,000 units/yr (held at the documented default)
  • Landed cost saved per unit: 3.2 $/unit (held at the documented default)
  • Share of units realizing the saving: 54 % (the input this scenario stresses; the baseline uses 75)
  • Regional ramp and qualification cost: 90,000 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Net regional benefit = annual units x landed saving x captured share + ramp cost.
  • Total regional production savings cost works out to 349,200 $ at these inputs, and this is the headline figure for the scenario.
  • Regional production savings cost per unit works out to 2.33 $ / piece at these inputs.
  • Variable regional production savings cost works out to 259,200 $ at these inputs.
  • Fixed regional production savings adder works out to 90,000 $ at these inputs.

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 22.4% below the baseline at 349,200 $.
  • It computes the annual net benefit of regional production from per-unit landed savings, the share captured, and the one-time ramp cost. 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 regional production savings cost: 349,200 $ (headline result)
  • Regional production savings cost per unit: 2.33 $ / piece
  • Variable regional production savings cost: 259,200 $
  • Fixed regional production savings adder: 90,000 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Regional Production Savings calculator, set share of units realizing the saving to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.