In our business we experience yield loss on shop orders. For example, we mix ingredients together and for a 1000 lb. shop order, we know we will experience x lbs. of yield loss and the shop order will yield, for example, 960 lbs. instead of the 1000 lbs. lot size. I have been researching yield loss and am struggling to find an answer to answer my questions.
- We want to use scrap factor to increase the requirements for ingredients. For example, if we know we are going to experience 4% yield loss on a shop order, we want the required ingredients to be inflated by 4%. I have seen scrap factor in multiple places within IFS, but am not sure how to do what we are after, without adding, in this example, 4% scrap factor to each ingredient in the product structure.
- The second part of this question is that we don’t actually scrap anything out in IFS. We just receive less than the required amount on the shop order. Does that affect the scrap factor use?
- When looking at product costs, it seems that the yield loss causes cost variances. We are hoping to find a solution to this where when we know an operation is going to have a yield loss of 4%, the costs are calculated with that assumption, and then the variance would come in when the yield loss is actually more or less than the planned yield loss. Again looking at scrap factor for this as well, but not sure the best way to go about this. Is scrap factor the right approach here, or does anyone have any other suggestions?