﻿ View source for Scrap rate - CEOpedia | Management online
View source for Scrap rate
← Scrap rate
{{infobox4 |list1= <ul> <li>[[Direct expense]]</li> <li>[[Two-tier inventory control]]</li> <li>[[Uniformity of production]]</li> <li>[[Stock turn]]</li> <li>[[Product cost]]</li> <li>[[Fixed cost]]</li> <li>[[Economic obsolescence]]</li> <li>[[Production capacity]]</li> <li>[[Types of inventory]]</li> </ul> }} '''Scrap rate''' is the percentage of unsuccessful kits or materials that can not be repaired or restored and is therefore condemned and rejected.The scrap rate measures the [[production]] [[quality]] of the [[production function]]. The high value of this KPI is probably indicative of poor raw material inputs, careless production configuration procedures, faulty machines or inefficient production operators, which will increase the [[company]]'s costs and slow down daily operations. ==What is the value of scrap?== The value of scrap is the value of individual components of a [[physical asset]] when the asset itself is no longer used. The individual components known as scrap metal are worth something if they can be used for other purposes. Sometimes you can use scrap as such; at other times they must be processed before they can be re-used. The value of the item's scrap depends on the supply and [[demand]] for materials to which it can be divided The scrap rate measures the [[production]] [[quality]] of the [[production function]]. The high value of this KPI is probably indicative of poor raw material inputs, careless production configuration procedures, faulty machines or inefficient production operators, which will increase the [[company]]'s costs and slow down daily operations. A very high scrap ratio may also lead to the inability to produce enough ready-made products to fulfill [[customer]] orders. The scrapping rate can be reduced by increasing the number of [[training]] for programmers and operators, documenting [[product]] data throughout the [[process]], or using scientific approaches such as [[Six Sigma]] or multivariate tests<ref> Optimal production lot sizing with rework, scrap rate, and [[service]] level constrain 2007</ref>. The Formula For Calculating Scrap Value Is: '''Scrap Value = [[Cost]] of Asset − (Depreciation x Useful Life) ''' ==Negative Scrap Value== The scrap value of an asset can be negative if the cost of disposing the asset results in a net cash outflow that is a contributing factor in the scrap value. For example, consider the value of land owned by a company that only slightly went up in value by the end of its useful life. The scrap value of the land may be negative if the cost of demolishing any building on the land is higher than the cost of the land and the [[market]] [[price]] for the individual demolished components that can be sold for a value. ==Instructions for calculating the KPI indicator Scrap rate== Two values are used to calculate this KPI: the number of units that were scrapped during the [[production process]], and the total number of units produced in the same period of time. Scrapped units are defined as any production output units that are not good units or units that are processed. Good units are defined as units that undergo inspection and are approved for sale or use as a component in another [[production cycle]]. Include good units, converted units and scrapped units in the denominator of this calculation<ref>Improved Gate [[System]] for Scrap Reduction in Injection Molding Processes 2015</ref>. KPI formula: '''(Number of scrapped units / total number of units produced) x 100''' ==Footnotes== <references /> == References == * Arebey, M., Hannan, M. A., Basri, H., & Abdullah, H. (2009), [https://www.researchgate.net/publication/224129415_Solid_waste_monitoring_and_management_using_RFID_GIS_and_GSM ''Solid waste monitoring and management using RFID, GIS and GSM] * Graham I., Goodall Y., Claire P., Andrew P., Conway J., Etienne Ma., (2015), [https://link.springer.com/article/10.1186/s13243-015-0019-2 ''Performance measurement and KPIs for remanufacturing''], Journal of Remanufacturing * Mehdi M., Kazem A., Romeo M., (2015), [https://www.sciencedirect.com/science/article/pii/S235197891500044X ''Improved Gate System for Scrap Reduction in Injection Molding Processes''], Procedia Manufacturing, Volume 2 * Merk S., Scholz C., Florek S., Mory D., (2015), [https://www.sciencedirect.com/science/article/abs/pii/S0584854715001846 ''Increased identification rate of scrap metal using Laser Induced Breakdown Spectroscopy Echelle spectra''], Spectrochimica Acta Part B: Atomic Spectroscopy, Volume 112 * Shahbaz S., Mohammed S., Kurdve M., (2017), [https://www.sciencedirect.com/science/article/pii/S2351978917300185 ''Material Efficiency Measurement: Empirical Investigation of Manufacturing Industry''], Procedia Manufacturing, Volume 8 * Singa W., Chia-Kuan T., (2007), [https://www.researchgate.net/publication/224129415_Solid_waste_monitoring_and_management_using_RFID_GIS_and_GSM ''Optimal production lot sizing with rework, scrap rate, and service level constraint''], Mathematical and Computer Modeling, Volume 46, Issues 3-4 * Wenfang G., Xihua Z., Xiaohong Z., Xiao L., Hongbin Ca., Yi Z., (2017), [https://pubs.acs.org/doi/abs/10.1021/acs.est.6b03320 ''Lithium Carbonate Recovery from Cathode Scrap of Spent Lithium-Ion Battery: A Closed-Loop Process''], National Engineering Research Center of Distillation [[Technology]], School of Chemical Engineering and Technology, China [[Category:Economics]] {{a|Angelina Hebda}}
Return to Scrap rate.
Retrieved from "https://ceopedia.org/index.php/Scrap_rate"