Hi Vasee Alee,
I am not sure what you mean by 'waste management system'.
I am guessing that you perform embroidery for others and that each job has a planned amount of each yarn and you want to monitor whether the amount of yarn that is used is being accounted for by the amount of production/sales.
An approach is...
Hold inventory of the yarns as Products,
Create a BOM product for each customer's job that has the expected amount of each colour yarn required to embroider 1 (or N) items. include the customers unembroidered product (created as stocked or non-stocked as required (.. see below)
Modify the sales order completion process so that a Production record is created for each customer product when the sales order is completed (just to save a manual step).
Perform the embroidery and Complete the Production. This will increment the inventory of that embroidered customer product (which can then be shipped/invoiced) and decrement the qty of each yarn product included in the that embroidered customer product's BOM.
Regular stocktakes of each yarn product should show whether usage is exceeding the allowance+waste that you have included in the BOM.
If you have a need to keep track of the qty of customers products that have been received by you and not yet returned you can create a Product for each unembroidered customer product (with a cost of a fraction of a cent so no accounting consequences) and receive the products into inventory and the qty will decremented by the Production process. Set the unembroidered customer product as 'stocked'
Again, sorry if I have misunderstood your question.
regards