Shrink Factor

This field applies to APS and MRP.

Enter the percentage factor by which you wish to increase the quantity of the planned job or order to compensate for expected loss prior to receiving an item to the stockroom. The system decreases the outstanding receipt of the planned job or order by the same amount, using this formula: desired quantity * (100/(100-shrink factor)). If Shrink Factor is specified for a manufactured item, enough materials are created, or capacity used, to make a 100% of the desired amount.

Alternatively, you may establish a yield percentage and allow the system to then calculate the shrink factor based on yield.

Example: you need 100 parts of Item A, and its shrink factor is 20%. The total units of item A to produce is determined by this formula: 100*(100/(100-20)) = 125. Therefore, enough components are planned to produce 125 units. Capacity for producing the 125 units will be reserved, and a plan for 100 Item A will be created.

Note: You can determine the appropriate shrink factor by evaluating historical records that show the amount of scrap reported at the job item level. Use the Job Transactions Report to show historical scrap reported against specific jobs.

After you update this field, then save the record, the yield of the item's last current operation will be adjusted to reflect the new shrink factor.