How Standard Quantities are Calculated in BOM

Issue

How are Standard Quantities calculated in Bill of Materials?

Resolution

The scrap percentage is the percentage of the component amount (standard quantity) that is expected to be unusable for the assembly. Therefore, the standard quantity is calculated with this formula:

Standard Quantity = Design Quantity / (1 - Scrap Percentage)

For example, suppose you’re assembling an item that requires 100 cm of wire. You anticipate that 10% of the wire will be scrapped. Using the formula, the standard quantity is 111.11, because 111.11 minus ten percent equals 100, the quantity of wire actually needed for each assembly.

Standard quantities are rounded up when necessary. For example, suppose the scrap percentage for a widget is 5 percent, and that the design quantity is three widgets. The calculated standard quantity would be 3.16 widgets. You can’t use 0.16 widgets, however, so the standard quantity—because widget quantities are tracked with zero decimal places—would be rounded to 4.

2 other examples:=

Design quantity = 1
Scrap percentage = 10%
Standard Quantity = 2

1 / (1 – .10)

1/.90 = 1.11 which rounds to 2 Standard Quantity


Design quantity = 1
Scrap percentage = 90%
Standard Quantity = 10

1 / (1 - .90)

1/.10 = 10 Standard Quantity

This article was TechKnowledge Document ID: 28731