How does Wastage work in shopVOX?
In shopVOX when you use "Materials", you can set them up to calculate wastage by making sure you provide all the required data.
On a Material make sure you have values for
Width, Height, Conversion Factor, Buying Units, Selling Units and also enable the flag "Calculate Wastage" and also pick if you want both sides (Height & Width ) to be fixed for wastage calculation (generally for substrates) or only one side (Height or Width) fixed for wastage calculation (generally for rolls where one side is known and the other side is how ever long the roll material is needed). Also you can setup what price to charge for wastage by putting in the wastage markup in the field shown below. You can make it just cost by putting that % to be 1 or anything else as you need.
Now whenever this material is used in a template, there is an icon (the half circle)
which when clicked will show you the wastage calculations and also will show you the visual of how the wastage was calculated like below.
NOTE: There are some special cases which you need to keep in mind while using this feature.
- If you are using something like a Roll, and you define Width, Height, - Make sure the field Sell/Buy Ratio is correct.
What is Sell/Buy Ratio? Sell/Buy Ratio is the math between "Selling Units" and "Buying Units". Example if you buy a "sheet" of substrate but you sell as "sqft/sqm" and you give the dimensions of this sheet (Height and Width) then you need to put how many sqft/sqm per sheet is in the Sell/Buy Ratio field.
Example: Buying Units - Sheet, Selling Units - sqft, Width = 48", Height = 96", then "Sell/Buy Ratio" = 32 , because there are 32 sqft for this sheet. What is the math? 48x96/144 = 32
Buying Units - Roll, Selling Units - sqft, Width=54", Height=1800", then "Sell/Buy Ratio" = 675 , because there are 675 sqft in this "roll" What is the math? 54x1800/144 = 675
- Also one other item to keep in mind is , when you are using Wastage, especially if you are using the Width/Height for Fixed field, make sure you give the smaller of the two dimensions of the material in this drop down. Because you want the wastage to be calculated on the smaller of the two (Height/Width) to be used for wastage calculation, not the larger side.
How the formula works:
Here is the formula...
(used sqft * unit price + wasted sqft * wastage price) /total sqft
wastage price = unit cost * ( 1 + wastage markup)
We will use the scenario of Banner material and calculate the wastage of the Width of the Roll of the material. For simple math calculations, we will use a 24" wide roll of material.We will also use a Wastage Markup of 100%. NOTE: This field should be the actual Markup you would like it to be. not a markup factor. ie. for a 20% markup enter 20, not 1.2.Here is a screenshot of the settings for the Banner material.
Next, we will use a 1 square foot as our example...again to keep the math simple.
Here is the Formula again and the screen shot shows the data point for each variable.
(used sqft (A) * unit price (Y) + wasted sqft (B) * wastage price) /total sqft (C)
wastage price = unit cost (X) * ( 1 + wastage markup (Z))
(A * Y + B * wastage price) / CWastage price = X * (1 + Z)
This image is from the Material page itself.
So it ends up being...
(A * Y + B * wastage price) / C(1sqft * $2 + 1sqft * ($1 * (1+ 100%))/2 sqft = Wastage price = X * (1 + Z)
Let's finish the math, step by step; below:
$2/sqft + 1sqft * ($1 * (2)) / 2 sqft =
($2/sqft + $2/sqft)/ 2sqft =
$4/sqft / 2sqft =
Total = $2 Unit price
This Unit price is then used to calculate the total Material cost on the Bill of materials for the material.