Scrap rate is the share of production that has to be thrown away. With first pass yield (FPY) it is the Quality side of OEE, and it drives the cost of poor quality.
The Scrap Rate formula
Scrap Rate = Scrapped Units / Total Units Produced
Step by step
- Count total units produced. Take the total number of units the process made in the period.
- Count scrapped units. Count the units scrapped (not the reworked ones, which are a separate loss).
- Divide for scrap rate. Scrap Rate = Scrapped Units / Total Units Produced, as a percentage.
- Find first pass yield. First Pass Yield = (Total - scrap - rework) / Total. It is the share that was right first time.
A worked example
A line produced 20,000 units, scrapped 500 and reworked 300:
| Step | Calculation | Result |
|---|---|---|
| Scrap rate | 500 / 20,000 | 2.5% |
| First pass yield | (20,000 - 800) / 20,000 | 96.0% |
| Annual scrap cost | 500/shift × cost × shifts | size it |
Skip the spreadsheet
Open the Scrap & Quality Cost Calculator
Our free Scrap & Quality Cost Calculator does this live, with the benchmark overlay.
Common mistakes
- Counting rework as scrap (or ignoring rework entirely): they are separate quality losses.
- Pricing scrap at material cost only, ignoring the value added before it failed.
- Measuring scrap only at the end, missing where in the process it is created.
Scrap Rate FAQ
What is the difference between scrap and rework?
Scrap is discarded. Rework is fixed and sold, but it still costs time and money, so both reduce first pass yield.
How does scrap rate relate to OEE?
Scrap and rework reduce the Quality factor of OEE, since only good first-time parts count.
How should I cost scrap?
Use the full cost at the point of failure (material plus value added), not just raw material, to see the true loss.
Related: OEE · the six big losses · root cause analysis