Scrap Rate Cost
Quantify the hidden burden rate of material defects and rework loops.
Scrap Rate
True Cost of Scrap
The Math
Scrap isn't just lost material; it is lost labor and lost spindle time. You must factor in the work already invested into the part before it failed QC.
Scrap % = (Scrap Units / Total Units) × 100
Cost = Scrap Units × (Material Cost + Labor Cost)
Cost = Scrap Units × (Material Cost + Labor Cost)
Example Calculation
You run a batch of 10,000 units. 450 fail inspection (4.5% scrap rate).
The raw aluminum costs $12.50 per part, and by the time it reaches QC, $8.00 of labor/machine time has been invested.
Cost = 450 units × ($12.50 + $8.00) = $9,225.00 straight to the bottom line.