# Job Shop Scrap and Rework Cost Calculator

> Source: https://netray.co/tools/job-shop-scrap-and-rework-cost-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Put a dollar figure on annual scrap and rework, net of recovery, and test how much a reduction program is worth.

## Category

quality

## Industry

Job Shop Machining

## Audience

- Quality manager
- Shop owner
- Operations manager

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Parts started per year

**Key:** annual_parts

**Type:** number

**Default:** 40000

**Min:** 0

**Step:** 500

**Unit:** parts

#### Scrap rate

**Key:** scrap_pct

**Type:** number

**Default:** 3

**Min:** 0

**Max:** 30

**Step:** 0.1

**Unit:** %

#### Rework rate

**Key:** rework_pct

**Type:** number

**Default:** 5

**Min:** 0

**Max:** 40

**Step:** 0.1

**Unit:** %

#### Material cost per part

**Key:** material

**Type:** number

**Default:** 14

**Min:** 0

**Step:** 0.25

**Unit:** $

#### Labor and machine cost in a scrapped part

**Key:** value_added

**Type:** number

**Default:** 22

**Min:** 0

**Step:** 0.5

**Unit:** $

**Help:** Average cost already added when the part is scrapped.

#### Scrap recovery per part

**Key:** recovery

**Type:** number

**Default:** 1.5

**Min:** 0

**Step:** 0.1

**Unit:** $

**Help:** Scrap metal value.

#### Average rework cost per part

**Key:** rework_cost

**Type:** number

**Default:** 9

**Min:** 0

**Step:** 0.5

**Unit:** $

#### Reduction target

**Key:** reduction

**Type:** slider

**Default:** 30

**Min:** 0

**Max:** 100

**Step:** 5

**Unit:** %

**Outputs:**

#### Scrapped parts per year

**Key:** scrap_parts

**Expr:** annual_parts * scrap_pct / 100

**Format:** integer

#### Annual scrap cost

**Key:** scrap_cost

**Expr:** scrap_parts * (material + value_added - recovery)

**Format:** currency

#### Reworked parts per year

**Key:** rework_parts

**Expr:** annual_parts * rework_pct / 100

**Format:** integer

#### Annual rework cost

**Key:** rework_total

**Expr:** rework_parts * rework_cost

**Format:** currency

#### Total cost of scrap and rework

**Key:** total_cost

**Expr:** scrap_cost + rework_total

**Format:** currency

**Primary:** true

#### Annual saving at reduction target

**Key:** saving

**Expr:** total_cost * reduction / 100

**Format:** currency

**Primary:** true

#### Cost per part started

**Key:** per_part

**Expr:** total_cost / annual_parts

**Format:** currency

**Chart:**

#### Annual cost vs scrap rate

**Type:** line

**X:** scrap_pct

**From:** 0

**To:** 10

**Steps:** 21

**Series:**

- total_cost
- scrap_cost

**Disclaimer:** Excludes lost capacity, expedite freight and customer penalties, which often exceed the direct cost.

## Content

**Intro:** Scrap and rework are often tracked as percentages and never as money. This calculator converts the rates on your NCR log into annual dollars so a quality project can be compared with any other use of capital.

**Sections:**

#### How to use it

**Body:** Take your annual started quantity, scrap and rework rates from your ERP or NCR system, and enter the cost values. The scrapped part carries material plus every operation completed before it was rejected, so use the average value-added at the point of scrap, not the finished cost. Set a reduction target to see the saving. The chart shows how cost scales with scrap rate.

#### The method

**Body:** Scrap cost = scrapped parts x (material + value added - recovery). Rework cost = reworked parts x average rework cost. Total is the sum. This is the internal failure part of cost of quality. It is deliberately a floor: rework also consumes machine capacity that could have shipped other orders.

**Bullets:**

- Use started quantity, not shipped quantity, as the base
- Late-stage scrap costs much more than early-stage scrap
- Rework should include re-inspection time

#### Common mistakes

**Body:** Using finished part cost for every scrapped piece overstates cost when most defects are caught at first operation. Ignoring rework because it eventually ships hides a real expense. Check that reason codes on scrap tickets in JobBOSS, E2 Shop System or Global Shop Solutions are used consistently, otherwise the rate you enter is unreliable. Fixing the top two or three causes usually yields more than a general reduction target.

**Cta:** Netray can summarize scrap and rework reason codes from your ERP so the largest causes are visible in one view.

**Faq:**

#### What is a typical scrap rate?

**Answer:** It varies widely by process and material. Many established machine shops see low single-digit percentages, while new parts and exotic materials can run much higher on first lots. Use your own history.

#### Should scrap use standard cost?

**Answer:** Use actual value added at the point of scrap if you can. Standard finished cost overstates early scrap. Many ERPs report scrap by operation, which gives a better average.

#### Does the saving include capacity gains?

**Answer:** No. It is direct cost only. If the shop is capacity-constrained, freed hours can be sold and the real benefit is larger.

#### How do I get the rework rate?

**Answer:** Count parts routed to a rework operation or NCR disposition of rework, divided by parts started. If rework is not recorded, sample a month of travelers.

## Search terms

cost of poor quality calculator machine shop, scrap cost calculator, rework cost calculator, scrap rate cost per year, job shop scrap reduction savings, cost of quality manufacturing, scrap rework ncr cost, machining scrap calculator

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