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Scrap Rate & Cost of Scrap Calculator

Scrap rate from units produced and scrapped, the full cost of scrap (material, labour, overhead, disposal, less salvage), annual cost, extra units to schedule to cover it, and the saving from each point of reduction.

Units produced in the period

Units scrapped

Material cost per unit

Labour + machine cost per unit (up to the point of scrapping)

Disposal / handling cost per scrapped unit

Salvage / recycling value per scrapped unit

Periods per year

Good units required per period

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How it works

Scrap rate = scrapped ÷ produced; cost per scrapped unit = material + labour/machine to that point + disposal − salvage; units to schedule = demand ÷ (1 − scrap rate)

Scrap is the most visible quality cost, but its accounting is often incomplete: a rejected part has consumed material, machine time and labour up to the point it failed, must be handled and disposed of, and at best returns a small salvage value. Multiplying the true per-unit loss by the scrap count gives the cost, and spreading that across good units shows how scrap silently inflates the cost of everything you ship. The gross-up in the schedule (demand divided by yield) shows why scrap also eats capacity, and the value of a single percentage point turns quality projects into a budget. Because a handful of defect types usually cause most scrap, a Pareto of reasons is the natural next step after this number.

Worked example

1,560 of 48,000 units scrapped is 3.25%. Each costs $4.10 material + $2.30 labour + $0.15 disposal − $0.40 salvage = $6.15, so the month’s scrap costs $9,594 — $115,000 a year and 21¢ on every good unit. Shipping 46,000 good units needs 47,545 scheduled; every point of scrap removed is worth $35,400 a year.

Frequently asked questions

Should scrapped units include those caught by the customer?

Track them separately as external failure cost — they carry far higher costs (returns, credits, reputation) than internal scrap.

What about rework instead of scrap?

Rework saves the material but adds labour and delay; use the rolled-throughput-yield calculator for rework loops and count only irreparable units here.

Related calculators

Rolled Throughput Yield (RTY) Calculator

Rolled throughput yield across a multi-step process from each step’s first-pass yield — RTY, normalised yield per step, the hidden factory of rework, units to start for a target output, and the sigma level.

Cost of Poor Quality (COPQ) Calculator

Cost of poor quality as a share of revenue: prevention, appraisal, internal failure and external failure costs — the four-category breakdown, benchmarks, and the payoff of shifting spend from failure to prevention.

OEE Calculator (Overall Equipment Effectiveness)

Overall equipment effectiveness from shift time, downtime, ideal cycle time, pieces produced and rejects — availability, performance and quality factors, the six big losses, and the hidden capacity you could recover.

Operations planning estimate based on the figures entered; validate against measured shop-floor data before changing staffing, equipment or customer commitments.