Close the month’s mass balance: how much raw material became good product, where the rest went, what it costs net of scrap sales and what reaching the target is worth.
Pre-sizing and estimating tool: results do not replace design, calculations or reports signed by a licensed professional, nor verification against the applicable codes and standards.
Net cost of each loss in the period (material lost − resale value + extra cost), largest first, with the cumulative percentage.
Where the raw material used in the period went: good product, each weighed loss and the unaccounted loss.
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Cash flow of the improvement: investment in year 0 and annual savings escalated at the rate entered, discounted at the MARR.
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It closes the mass balance for a period: how much raw material became good product, how much went to each loss and how much is left unexplained. Then it works out loss cost net of scrap sales and how much the plant saves a year by reaching its yield target. Use it for the monthly close or to justify a loss reduction project.
The stamping shop used 44,000 lb of steel and shipped 52,000 parts at 0.7 lb, or 36,400 lb: an 82.7% yield. Losses total 7,600 lb ($3,800 at $0.50/lb); scrap sold at $0.20/lb brings back $1,360, so the net loss is $2,440 a month, about $29,000 a year.
It is what is left after subtracting good product and all weighed losses from raw material used. In the example it is 710 lb (1.6%). Up to 1% to 2% is normal (weighing and inventory rounding); above that, check scales, inventory counts, records and diversion before tackling other losses.
With the same good output, higher yield means buying less raw material: in the example, from 44,000 lb to 36,400 ÷ 0.86 = 42,326 lb, or 1,674 lb less per month. Each pound lost costs on average $0.50 minus $0.18 of scrap value, or $0.32. The saving is about $538 a month, $6,500 a year; the cash flow sets that against the investment entered.
Raw material used is opening stock + receipts − closing stock for the period. Good output comes from production reporting or shipping; losses from weighing scrap bins, rejects and samples. Scrap prices are on the scrap sales invoices; extra cost includes waste hauling and disposal.
Because scrap is worth a fraction of what the raw material cost. In the example, steel costs $0.50/lb and scrap sells at $0.20/lb: each pound lost brings back only 40% of its value. The real gain is losing less (better nesting, fewer coil ends and rejects), not selling better.
It only looks at raw material: labor, energy and machine time spent on scrapped parts are left out (use the cost of poor quality calculator). It assumes the loss mix stays the same as yield improves. Raw material and product must be on the same basis and period, or the balance will not close.
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