Equation 1
=E*(1-A)*(1-B)
where:
E = Equipment Yield in decimal form (i.e. 0.999)
A = risk probability (i.e. 0.001)
B = risk (i.e. 0.0001)
Equation 1 includes all yield factors in the cost of scrap calculation for Assembly and Packaging cost of ownership. Using Equation 1 has one error however. Normally the cost of shipping bad product is much greater than the cost of rejecting good product. Equation 1 treats these costs equally. If both costs of measurement risk can be estimated then Equation 1 can be modified to reflect the difference in the costs of alpha risk and beta risk:
Equation 2
=E*(1-A)*(1-(B*S/R))
where:
E = Equipment Yield in decimal form (i.e. 0.999)
A = Alpha risk probability (i.e. 0.001)
B = Beta risk (i.e. 0.0001)
S = Cost of shipping a bad product (i.e. $100.00)
R = Cost of rejecting a good product (i.e. $10.00)
Normally R is equal to the Value of Incoming Unit at this Point in Process found in the administrative rates section of TWO COOL®.
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