We are looking to purchase new routers within our environment, the routers we are looking at one come with two interfaces. I understand we could purchase additional modules.
I was thinking of using router on a stick with vlans and bringing the connection forward to a switch. This was something which we all learnt was possible in our CCNA but it is something which is recommend in a production environment?
What could be the implication?
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A low end L3 switch may provide 100x the performance of a low end router, for about the same price.
Cisco recommends a 3925 for WAN connections up to 100 Mbps (effectively the aggregate performance for all traffic transiting the router).
As others have said a L3 switch would be better but you would still probably need a router as well to connect to the rest of your sites. You need to work out how much bandwidth you need between sites to scale the router. If you also want to use the same router to route for the vlans then see Joseph's mail. Bear in mid just because a router has 1Gbps interfaces it doesn't meant it support 1Gbps throughput.
One thing to mention is that if you decide to go with the router only option if you find the bandwidth is not enough for your internal vlans then it would be relatively easy to simly purchase a L3 switch at a later date and migrate the vlans to the L3 switch.
I agree that router on a stick is fine for this scenario, using something like a 29xx ISR 2 router which like a L3 switch uses CEF to route in hardware when possible. Of course it depends on what the users are doing, but as long as they aren't doing stuff like all streaming HD video it should be fine.