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Material Costing Logic

Material costing is the first and often most significant component of the total cost buildup in CostEngine. It handles everything from raw material rates to complex scrap recovery.

Overview

Material cost calculation depends on three main pillars: 1. Material Specification: Grade, form, and weight. 2. Rate Management: Master rates vs. quote-specific overrides. 3. Yield & Scrap: How much material is actually needed vs. how much stays in the part.

Data Model

Field Data Type Required Description Source
material_grade String Yes E.g., SAE4140, EN8, SS304 Excel
material_form Enum Yes Bar, Plate, Sheet, Casting, Forging Excel
gross_weight Decimal (kg) Yes Weight of raw material input Excel
net_weight Decimal (kg) Yes Weight of the finished part Excel
rm_rate Decimal (₹/kg) Yes Rate of raw material Master/Excel
scrap_recovery_rate Decimal (₹/kg) No Credit for sold scrap/shavings Master

Cost Calculation Formula

Standard Material Cost

\[ \text{Material Cost} = \frac{\text{Gross Weight} \times \text{RM Rate}}{\text{Yield %}} \]

Where:

\[ \text{Yield %} = \frac{\text{Net Weight}}{\text{Gross Weight}} \times 100 \]

Net Material Cost (with Scrap Recovery)

For high-value materials (Titanium, Copper), the shavings/scrap can be sold back.

\[ \text{Net Material Cost} = (\text{Gross Weight} \times \text{RM Rate}) - [(\text{Gross Weight} - \text{Net Weight}) \times \text{Scrap Recovery Rate}] \]

RM Rate Lookup Strategy

CostEngine follows a strict hierarchy for material rates:

  1. Quote Override: The estimator manually entered a rate for this specific quote.
  2. Customer Price List: A specific rate is contracted for this customer.
  3. Material Master: The global "standard" rate updated by the Admin.
  4. Fallback: If none of the above exist, the system flags a "Missing Critical Data" error.

Tooling & Consumable Costs

Material costing also captures Direct Tooling required for the specific part.

Durable Tooling

Amortized over the expected life of the tool. - Example: A specialized gauge costs ₹50,000 and lasts for 25,000 pieces. - Piece Cost: ₹50,000 / 25,000 = ₹2.00/pc

Consumable Tooling

Replaced frequently during production. - Example: Cutting inserts replaced every 50 pieces. - Piece Cost: ₹500 (insert cost) / 50 = ₹10.00/pc

Explainability example

A drill-down into a Material Cost line might show:

Material: SAE4140 (Bar Stock) - ₹263.95

Source Data:
✓ Gross Weight: 2.304 kg (from Excel B10)
✓ Net Weight: 2.000 kg (from Excel B11)
✓ RM Rate: ₹99.50/kg (from Master Data)

Derived Metrics:
• Yield: 86.8%
• Weight Loss: 0.304 kg (13.2%)

Calculation:
(2.304 kg × ₹99.50/kg) / 0.868 = ₹263.95

[Override RM Rate] [Override Weights]

Validation & Edge Cases

Common Validations

  • Net > Gross: Blocked (Logic error).
  • Yield < 50%: Warning (Unusually high material loss).
  • Zero Weight: Error (Cannot calculate cost).

Edge Case: Customer Supplied Material (CSM)

In some contracts, the customer provides the raw material. - Handling: Set rm_rate to ₹0. The system still tracks weights for logistics and scrap management but results in ₹0 material cost.