Example: Different Scrap Data 
According to the BOM, 100 blank boards, 100 processors, and 100 BIOS assemblies are required to manufacture 100 circuit boards. The routing for the finished circuit boards contains two operations for which production activities are consumed. The blank boards and processors are assembled in operation 1, and the BIOS assemblies are added in operation 2.
To manufacture 100 circuit boards, 104 BIOS assemblies are actually required. Therefore, a component scrap of 4% is entered in the BOM or in the material master for the BIOS assembly. If this scrap is entered in the material master, it applies to all materials containing the BIOS assemblies as components. If it is entered in the BOM, it applies to the BOM only.
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It is now established that an operation scrap of 10% always occurs in operation 1, and for operation 2 the amount is 20%. Since you want to take this into account when the system calculates the cost of goods manufactured, you enter the relevant amount for each operation in the routing. This ensures that the quantity of production activities corresponds to the actual component quantity processed (in this case, it is reduced).
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The target is now to manufacture 100 units, instead of 72. The operation scrap entered in the routing reduces the quantity used in subsequent operations. To obtain 100 circuit boards despite the operation scrap, the initial quantity must be increased. To do this, an assembly scrap of 38.89% must be entered for the circuit boards in the material master that increases the quantities of the components used so that 100 boards are produced. You can determine the assembly scrap by scheduling the routing and transferring the assembly scrap into the material master.
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To ensure that the component quantities are adjusted, you also enter the operation scrap in the BOM. The scrap entered in the routing affects the quantity of production activities only, not the amount of components used. To ensure that the actual quantity of BIOS assemblies required is removed, you enter another operation scrap of 20% in the BOM:
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Without component scrap for the BIOS assembly, only 120 units would be required for operation 2:
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See also:
For more information about different types of scrap, see the following: