Engineer To Order Material Costs

Now that we have been investigating many of the details of material costs in quotations, we will now take a look at the mathematical calculations required.

Engineer To Order Material Costs

Step 1)  Determine the quantity of parts required.  

• This is the number of parts required to make the end product.  In many situations if you are building a large assembly there may be situations where parts required would be greater than 1.partsRequired = 1   // Usually 1

Step 2) Determine the total quantity required to manufacture the quantity that is being requested on the quotationtotalQuantity   = quotationQuantity*partsRequired

Step 3)  Calculate the number of parts or pieces that can be made out of a single purchased stock.stockPieces = xxx

Step 4)  Stock Required is the number of purchased units that are required to manufacture the quoted quantitystockRequired = Ceiling(totalQuantity / stockPieces)

Step 5) Determine the unit cost of the stock item.  

• With quantity breakouts, the cost may vary depending on the quantity. Also, the breakouts may be in different units— i.e. LBS versus EACH.  So, we find the matching price based on the Total Quantity multiplied by the Unit Of Measure conversion.

• Thus, Price = FindMatchingPrice(stockRequired*unitOfMeasureConversion)

• The goal now is to come up with a Unit Cost of material based on the values above and the type of material calculation which was described earlier.

Single Part Price

• return price

Lot Price

• return price/totalQuantity

Amortize

• return (unitOfMeasureConversion*stockRequired*price)/ totalQuantity

Calculate Include Scrap

• return price *unitOfMeasureConversion/stockPieces

Calculate Without Scrap

• return price *(unitOfMeasureConversion / ((stockWidth*stockLength)*(blankWidth*blankLength))/partsPerBlank