Co-products and by-products in Process Manufacturing

By-products of the formulation process are objects that you need to inventory but that are probably assigned zero or little cost. For example, if you are processing cherries for use in a jam recipe, you must remove the stems and the seeds. If you want to keep track of the removed amount, it is considered a by-product of the formulation. You can choose not to account for this waste product as by-product; in that case, your yield value per pound of unprocessed cherries will be lower.

Co-products in process manufacturing occur when you package the blended ingredients into multiple types of products that can be sold. For example, 12-oz and 20-oz jars of cherry jam are co-products.

In process manufacturing, the number of co-products is based on orders. You do not produce the same amount or percentage of each co-product each time you do a run, as you do in discrete manufacturing.

When you have co-products, you also need to consider whether the co-products are produced on the same line. For example, does the same production line produce 12-oz jams and 20-oz jams, or are two different production lines used? This decision affects your setup process.