Correect Formula for Waste Percentage?

[wazzamcg]

Hi,

I would like to know the forums thoughts on how they see waste.

If a farmer got an order for 100 good pumkins and it took him to grow 200 pumkins to get 100 good ones, what percentage waste was there?

Some people say 100% waste and some say 50% waste. I'm curious on how people view it.

((Gross - Net)/ Gross)*100 = 50%

Where;

((Gross - Net)/ Net)*100 = 100%

Which is more correct and why?

Regards,
wazzamcg

 

[shemayisroel]

Good question, my assumption would be that your answer would vary from industry to industry.

In my view if you show what method/calc you use then that leaves no question in the readers mind as to what method was used to calculate these numbers.

In such situations and depending on who my target audience was I'd usually put in a foot note at the bottom of the report as to what calculation method was used.

There are many examples of these situations around where the correct answer would depend on the industry benchamrking calc's etc

 

[wazzamcg]

shemayisroel,

That's exactly my point, what I am asking is based on benchmarking on anything concerned with waste.

Personally, I am happy either way, however, there should be sound reasoning behind which way to choose and I haven't come across a strong argument why one is better than the other.

I feel that 100% waste, in the scenario supplied above, is more correct due to the waste was 100% compared to the order or what was required.

It seems to me that the answer may lay with the "eye of the beholder test" (the boss) and his logic may well be that the 50% is a better option to relay to his stakeholder's or staff. Hence, the lower percentage sounding better.

I am hoping that some analytical guru's may have logic behind the most correct answer. Thanks for your response.

Regards,
wazzamcg

 

[Stu Dapples]

I would have to agree with Shem, it depends on your business sector and the standards relating to it....

Here, we have a scrap rate, that is, to get 100 good components at a scrap rate of 20%, we dont just launch 120 components, there are complex calculations as to where the fallout is and at what rate.

In your example, I personally see that as 50% scrap, as it is 50% of your produced goods which came to yield. Some say yield, waste and scrap are the same thing, others that they are totally different!!

As suggested, usually a good way to cover your back is to explain your methods on the report, that way if the boss doesn't like it, he can suggest how he wants it measured....

This is a tricky one and an interesting debate, I hope it continues as it something I have had many a conversations about in the past and have yet to be persuaded either way!!

 

[spectre50]

I know that this is an old post but I had to make sure that others looking at this post would see that the answer is not in the eye of the beholder.

[(Gross-Net)/Net*100] Gives you the ratio of waste to good parts not the waste percent. From the OP if the waste percent was 100% all parts made would be bad.

[(Gross-Net)/Gross*100= Waste%] Gives you the waste percentage. From the OP if the waste percentage was 50% I know that I need to make twice as many parts as the order calls for.

[(Net)/(1-(Waste%/100))=Gross] Is used to calculate how many parts would be needed be made to complete the order.