Reshoring & Tariff Strategy worked example

Dual Sourcing Cost Impact at 22% split allocation to backup: a worked example

This worked example runs the dual sourcing cost impact numbers for a tougher week than the baseline: 22% split allocation to backup instead of the typical 30%. Estimates the cost of adding a second supplier, combining lost volume leverage with one-time qualification spend.

The inputs for this scenario

  • Annual volume split to second source: 45,000 units/yr (held at the documented default)
  • Second-source unit premium: 2.1 $/unit (held at the documented default)
  • Split allocation to backup: 22 % (the input this scenario stresses; the baseline uses 30)
  • Qualification and tooling cost: 60,000 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Annual dual-sourcing cost ($) = backup volume x second-source premium x split allocation% + qualification and tooling.
  • Total dual sourcing cost impact cost works out to 80,790 $ at these inputs, and this is the headline figure for the scenario.
  • Dual sourcing cost impact cost per unit works out to 1.8 $ / piece at these inputs.
  • Variable dual sourcing cost impact cost works out to 20,790 $ at these inputs.
  • Fixed dual sourcing cost impact adder works out to 60,000 $ at these inputs.

How this compares with the baseline

  • Against the tool's baseline example, where split allocation to backup sits at 30% and the headline result is 88,350 $, this scenario comes in 8.56% below the baseline at 80,790 $.
  • Use it when building the business case for a second source, comparing backup-volume split scenarios, or budgeting qualification spend for a risk-mitigation program. A result at this level usually justifies acting on the stressed input before touching anything else, because every other figure in the table is downstream of it.

Results at a glance

  • Total dual sourcing cost impact cost: 80,790 $ (headline result)
  • Dual sourcing cost impact cost per unit: 1.8 $ / piece
  • Variable dual sourcing cost impact cost: 20,790 $
  • Fixed dual sourcing cost impact adder: 60,000 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Dual Sourcing Cost Impact calculator, set split allocation to backup to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.