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Scrap & Rework Cost Calculator

Put a yearly number on quality losses so an improvement project can be justified in money, not percentages.

Quality loss per year
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How it works

Scrap loss = volume × scrap % × (cost − salvage) Rework loss = volume × rework % × rework cost Yearly loss = (scrap + rework) × 12

Which unit cost to use

Use the full cost the part has absorbed at the step where it is scrapped. A part rejected at final inspection carries every operation before it, so it costs more than one rejected at incoming inspection.

Reviewed November 2026. Formulas are shown above the guide. Report an error or request a calculator.

Put quality losses in money

A scrap rate of 3% sounds small in a production meeting. A loss of $90,000 a year does not. This calculator turns scrap and rework percentages into a yearly cost so that an improvement project can be compared with any other investment.

It covers the two most visible parts of the cost of poor quality: parts thrown away and parts fixed by hand. Inspection labor, warranty claims and lost customers come on top.

Worked example

The defaults describe a line making 40,000 units a month at a full cost of $6.40 each, with 3.2% scrap, $0.40 salvage per scrapped part, 4.5% rework and $1.90 of labor per reworked part.

ItemPer year
Scrapped units (40,000 × 3.2% × 12)15,360
Scrap loss (15,360 × ($6.40 − $0.40))$92,160
Rework loss (21,600 × $1.90)$41,040
Total quality loss$133,200

Cutting scrap to the 1.5% target saves $48,960 a year, which is the budget ceiling for the project that gets you there.

Which unit cost to use

Use the cost the part has absorbed at the step where it is rejected. A casting scrapped at incoming inspection costs its purchase price. The same casting scrapped after machining, plating and assembly carries all of that work. If your rejects happen at several stations, run the calculator once per station or use a weighted average.

Common mistakes

Frequently asked questions

What is the cost of poor quality?

All costs that would disappear if every part were made right the first time: scrap, rework, extra inspection, warranty and returns. This calculator covers scrap and rework.

Is a 3% scrap rate high?

It depends on the process. Machining lines often run below 1%, while new products and complex assemblies can exceed 5%. Compare with your own trend rather than an industry average.

Should I include material I can sell as scrap?

Yes, enter it as salvage value per scrapped unit. It reduces the loss.

How do I justify a quality project?

Use the yearly saving at target as the benefit, then compare it with the project cost in the equipment payback calculator.

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