Methods and Issues in Determining Material Cost for Sheet Metal Parts

Cost of a sheet metal part comprises three major cost components such as material cost, processing cost and overheads. Determining accurate material cost has always been an issue. Theoretically material cost can be calculated as follows:

Material Cost = Area of the flat pattern * thickness * (weight per unit volume) * cost per unit weight.

But this is not a correct estimate as the flat pattern has to be cut from a standard sheet and scrap will be generated while cutting as well as due to the shape of the part. So, various methods are employed by costing professionals to estimate material cost that includes scrap cost. Considering thickness, weight per unit volume and cost per unit weight as constant, part area that accounts for scrap is calculated as follows:

  1. Part Area = 1.2 times area of the flat pattern
  2. Part Area = Area of the bounding box that encloses the flat pattern
  3. The part under consideration is nested in a standard sheet and multiple quantities of same part are nesting. The quantity of the part is selected to fill the entire sheet.
Part Area = A*As/n*A,
Where A – Area of the flat pattern,
As – Area of sheet excluding remnants and
n is the quantity or number of parts nested in the standard sheet. 4. In few other cases, all the parts in an assembly having same sheet thickness are nested in standard sheet with a predetermined lot size.
Part Area = Ai*As/Σ(ni*Ai),
Where Ai – Area of the flat pattern of the ith part,
As – Area of sheet excluding remnants and
ni is the quantity of the ith part nested in the standard sheet.

Methods 3 and 4 are more accurate than methods 1 & 2. If the nesting software is more efficient enough as that of Nestlib, then the nesting software can automatically determine whether method 3 or 4 gives better utilization. Nestlib‘s optimizer module does this magic. Another important factor is sheet selection as utilization depends on the sheet size used. So, costing will further be more efficient if we can determine the optimal sheet size that gives maximum utilization. This task can also be performed automatically by inventory forecasting module of Nestlib. Even with all these above methods, we can only get a near accurate cost because the nested layouts at design stage involve only the particular part/assembly. Manufacturing might use a different nested layout involving other parts/assemblies. For a contract manufacturer, the nested layouts might even involve parts from different clients. But for costing, nested layouts at the design stage form a baseline for cost estimation and dictates a minimum utilization to be achieved during manufacturing.

i.e. if an utilization of 75% is achieved in design and an utilization of 85% is achieved in manufacturing, then it is acceptable. But if an utilization of 70% is achieved in manufacturing due to other assemblies, then manufacturing should use the nested layout given by design.