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Quality Rejection Cost Calculator

Work out quality rejection cost instantly with clear inputs, formula shown and shareable results.

About Quality Rejection Cost Calculator

The cost of a supplier quality failure is far more than the material value: it includes inspection, segregation, documentation, return logistics and the disruption of finding a replacement. Charging that cost back is what makes supplier quality improvement economically rational for them.

Formulas

Rejection rate

Rate % = Units rejected / Units received x 100

Total cost

Total = Rejected units x Unit cost + Rejected batches x Handling cost per batch

Worked example

With the default values below, Quality Rejection Cost Calculator returns Total cost of rejections of $473,200.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Units received
48,000
Units rejected
960
Unit cost
420
Inspection and handling cost per rejected batch
14,000

Results

Total cost of rejections
$473,200.00
Rejection rate
2.000%
Value of rejected material
$403,200.00
Handling and inspection cost
$70,000.00

Step by step

  1. 1Values used
  2. 2Rejection rate
  3. 3Total cost
  4. 4Total cost of rejections= 473,200.00
  5. 5Rejection rate= 2.000
  6. 6Value of rejected material= 403,200.00
  7. 7Handling and inspection cost= 70,000.00

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 3 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

Should rejection cost be charged back?

Where the contract allows it, yes. A documented cost recovery process changes supplier behaviour far faster than a scorecard alone.

What about the production disruption?

Add it separately, valued at the contribution margin of lost output. On a constrained line that figure usually dwarfs the material value.

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