Lean Waste Cost Calculator

Work out lean waste cost instantly with clear inputs, formula shown and shareable results.

About Lean Waste Cost Calculator

The seven wastes fall into two costing groups: time-based wastes such as waiting, transport, motion and over-processing, valued at the loaded labour rate, and material-based wastes such as defects and excess inventory, valued at their own cost. Summing them gives a figure that justifies improvement resource.

Formula

Waste cost

Time waste cost = (waiting + transport hours) x labour rate; total = time waste + defect cost

Worked example

With the default values below, Lean Waste Cost Calculator returns Annual Cost Of Waste of $3,974,400.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Waiting And Idle Timeminimum 0 hours/month: 220 hours/month
Transport And Motion Timeminimum 0 hours/month: 140 hours/month
Defect And Rework Costminimum 0 per month: 180,000 per month
Loaded Labour Rateminimum 0 per hour: 420 per hour

Results

Annual Cost Of Waste: $3,974,400.00
Monthly Cost Of Waste: $331,200.00
Cost Of Time-Based Waste: $151,200.00
Defect Share Of Waste: 54.35%

Step by step

1Values used
2Waste cost
3Annual Cost Of Waste= 3,974,400.00
4Monthly Cost Of Waste= 331,200.00
5Cost Of Time-Based Waste= 151,200.00
6Defect Share Of Waste= 54.35

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Which waste is usually largest?

Waiting, by a wide margin, but it is the least visible because nobody logs it. Overproduction is considered the worst waste because it generates inventory, handling and hidden defects.

Is valuing waste at the labour rate too simple?

It understates waste on a constrained resource, where the real cost is lost contribution, and overstates it where there is idle capacity nobody would pay to remove. State which basis you have used.