Operation and item yield are different than the component scrap percentage in product structures. Component scrap results in additional requirements for individual components of a parent item. When an item’s yield is less than 100 percent, MRP creates additional scrap requirements for the item, causing the item and all of its components to be overplanned. Depending on the manufacturing process, the percentage of a lot expected to be of acceptable quality may also fall below 100 percent.

The system can calculate the total yield for an item in two ways, based on the values in two item planning data fields: Yield % and Op Based Yield.

See Scrap for a more detailed description of how the component scrap percentage is used.

MRP can use the item yield percentage to plan additional supply. Using this method, the expected yield for an operation can be expressed as:

The total manufacturing yield for a product is determined by multiplying the yield percentages for each of its operations.

Take care when setting yield to anything but 100 percent—particularly when yield is used for multiple operations.

This equation includes an expected loss of one in three units. If MRP plans this item for a demand of 100 units, the system creates a scrap requirement for 51 units and a planned order for 151 units, based on the following formula:

With standard yield percentage, all component quantities use the same 66 percent item yield when MRP derives component requirements. For example, if this item has a requirement for one each of four components, each with a product structure quantity per of 1, MRP determines that 151 units are required for each component item, based on this calculation:

The system also supports yield calculation for component requirements based on individual operations within a parent item’s routing. To use this method, you must:

When operation-based yield is in effect, the Yield % field associated with the item is not used to determine component requirements.

Operation-based yield affects the explosion of bills of material in work orders, repetitive, advanced repetitive, and configured products, as well as MRP.

Using this method typically results in more accurate calculations and prevents overplanning of components. This is especially true in a mature process where yield percentages are highly predictable.

Based on the demand for 100 ITEM-A, MRP generates a planned order for 151, based on the following calculations:

The system uses the same calculation for the parent item regardless of the yield calculation method in effect. However, when calculating component requirements, the different methods yield different results, as illustrated in Operation-Based Yield Example.

Because Operation 10 is the first operation, it requires 100 percent of the components. When Op Based Yield is No, the component quantity is calculated from the yield percentage of the parent item. The system applies the same 66 percent item yield to each operation to determine component requirements of 151, according to the formula:

When Op Based Yield is Yes, the system uses the yield percentages of the parent’s operation records to determine component quantities. Operation 10 has an effective yield of 90 percent. It is anticipated that 10 percent of the parent items are scrapped at this operation.

As a result, only 135 (151 * 90%) parent items are input to operation 20 and only 135 COMP-2 items are needed (135 * 1). Operation 20 also has a 90 percent yield. As a result, only 90 percent of the 135 parent items (122 units) survive to operation 30. This means only 122 COMP-3 items are required, and so on.

As this example indicates, operation-based yield calculation can have a dramatic effect on the requirement for the components associated with the final operations in a manufacturing process.