Methodology: how this calculator works
The estimate has three components, each spelled out below. The goal is a conservative, defensible number, one you can put in front of a controller without hand-waving.
Lost margin
When the line is down, it isn't producing units you could have sold. We use contribution margin (price minus variable cost), not revenue: the material you didn't consume while down isn't a loss, so counting full price would overstate the damage.
Idle labor
The crew is still paid while the line is stopped. Using the loaded rate (wages plus benefits and payroll costs) reflects what the hour actually costs the business, not just the wage on the check.
Scrap (optional)
Many stops destroy product: purged material, startup rejects, out-of-spec units made while the process restabilizes. If you don't track this, leave it at zero and the estimate simply gets more conservative.
Putting it together
What is deliberately excluded
Fixed-overhead absorption is left out on purpose. Some downtime models allocate rent, depreciation, and salaried overhead to every down hour. We don't, because those costs are incurred whether the line runs or not, adding them makes the number bigger but easier to attack. The figure here is closer to a floor: the cash-flow impact you can defend line by line.
Caveats, the true cost is often higher
- Expediting and overtime. Catching up after downtime often means premium freight and overtime hours that this model doesn't include.
- Customer penalties and lost orders. Missed ship dates can trigger chargebacks, penalties, or quietly lost future business, real costs that are hard to put a per-hour number on.
- Lost margin assumes the line is sold out. If demand is slack and you can make the units up later with spare capacity, the lost-margin component shrinks (though labor and scrap remain). If the line is the constraint of the whole plant, the true cost can be much larger than this line-level view.
- Cascade effects. A stop on one line can starve or block downstream operations; this calculator only prices the line you entered.
- Quality after restart. Beyond per-event scrap, processes often run degraded for a while after a stop, that loss lands in OEE performance and quality rather than in this model.