The granulation and re-use of conversion scrap is widespread in the plastic product manufacturing industry. However, there seems to have been little or no discussion in the literature of the economics of different recycling routes or how the incorporation of granulate affects unit cost of product manufactured to a particular design specification. This paper briefly describes different in-house size reduction arrangements: closed-loop, machine-side and centralised. An investment appraisal is made of machine-side situations using NPV analysis, for three commercially available granulators, having a wide range of throughputs. A mathematical model is established and used to predict cost relationships in products incorporating different amounts of scrap. In this model the breaking load is employed as the design criterion, assuming that the strength properties of the materials follow the simple law of mixtures for composites. The applicability of this law to these material systems is examined and an analysis made using an expression assuming an exponentional relationship between breaking stress and volume fraction of granulate.