Yield Variance

MoneyBestPal Team
The difference between the actual yield and the standard yield of a product or process.
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Yield variance is the discrepancy between a product or process's actual and expected yields. The difference between the standard yield and the actual yield is that the standard yield refers to the amount of output that is actually produced.

Positive or negative yield variance is possible. If the actual yield is higher than the standard yield, there has been a favorable outcome, which is indicated by a positive yield variance. An undesirable outcome is indicated by a negative yield variance, which signifies that the actual yield was lower than the expected yield.

As an illustration, let's say you want to bake 100 cookies from a batch of dough. Yet, just 90 cookies remain after baking. This translates to a negative and unfavorable yield variance of -10 cookies for you.

How to calculate yield variance?

You need to know the actual yield and the standard yield of a product or process in order to compute yield variance. The formula for yield variance is:

Yield variance = Actual yield - Standard yield

You can also express yield variance as a percentage of the standard yield by dividing it by the standard yield and multiplying by 100%. The formula for percentage yield variance is:

Percentage yield variance = (Actual yield - Standard yield) / Standard yield x 100%

Using the cookie example above, the percentage yield variance would be:

Percentage yield variance = (90 - 100) / 100 x 100% = -10%

How to use yield variance to improve your operations?

Yield variance can assist you in locating and analyzing the causes of inefficiency, waste, and quality problems in your manufacturing and production operations. By calculating and tracking your yield variance over time, you can:
  • Check to discover if you are fulfilling your objectives and expectations by comparing your actual performance to your anticipated performance.
  • Take corrective action to minimize or reduce the causes of positive or negative yield variations.
  • Check to see if your corrective efforts enhance yields and lower variations by monitoring and assessing their efficacy.
  • Compare your performance against norms and best practices in the industry to determine how you can strengthen your competitive advantage.

Some common causes of positive or negative yield variances are:
  • Quality, quantity, and availability variations in raw materials
  • Variations in the upkeep, calibration, and functioning of the equipment
  • Variations in human elements including knowledge, experience, and motivation
  • Environmental variations, including those in temperature, humidity, and lighting
  • Process design, control, and optimization variations

To address these causes, you can use various tools and techniques such as:
  • Lean manufacturing, six sigma, statistical process control (SPC), and other quality assurance techniques
  • Root cause analysis (RCA), the plan-do-check-act (PDCA) cycle, and kaizen are examples of process improvement techniques.
  • Just-in-time (JIT), economic order quantity (EOQ), and safety stock inventory management techniques
  • Preventive maintenance (PM), total productive maintenance (TPM), and reliability-centered maintenance are examples of equipment management techniques (RCM)
  • Techniques for managing human resources include coaching, training, and incentive programs.
  • Environmental management techniques including illumination, noise reduction, and heating, ventilation, and air conditioning (HVAC)