A millwork company once descibed the waste calc as the same distinction between markups and margins. Each has a different base line.

Using your lumber example, try this:

We need to make 1000 ft of 2x3, You tell me your waste is 50% so you add or markup 50%. Thus we need to buy 1500.

Using the other model, we are still making 1000 ft of 2x3 but our waste is 33 1/3% of the total 1500 we need to buy. The internal math to get us there is 1000*(100/(100-33 1/3).

I don't believe either method is right or wrong because we end up with the same result. The only reason we chose the latter was because panel optimizers report material yield as a percentage. So 100-yield was the number we used for waste. I'm not advocating either mode, I just wan't you to understand what the number means. What one company did was print a simple excel sheet showing the waste factor conversion.