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Maximize Your Raw Material Spend by Understanding Volume Costing

Finished plastic parts are rarely sold by weight. Injection molded products are priced per piece and extruded products by unit length. Thus, costing and pricing are for fixed volumes.   Plastic raw materials are sold by unit weight, and when evaluating the cost of different material options, manufacturers typically compare the price per pound (or kilogram). However, this comparison fails to factor in any differences in density. Before comparing raw material pricing or embarking on cost reduction initiatives, it is vital to understand volume cost and its implications.

What is Volume Cost?

The volume cost of a raw material is the purchase cost of a unit volume of the material. For a quick and easy calculation, multiply the specific gravity by the cost per pound (or kilogram).

volume cost

The specific gravity value is typically found on the technical data sheet. Specific gravity is the ratio of the density of a material to the density of a reference material, where density is the mass of a substance per unit volume.In our case, the reference material is water, and since its density is approximately 1.0 g/cm3, we can assume specific gravity and density are equivalent for a given material.
The density of a material affects the number of parts or unit lengths that can be produced per pound (or kilogram), as the example below illustrates.


Example
Given 3 materials with different density (specific gravity) values, calculate the number of parts that can be manufactured from 1 lb. of material. Suppose the part is an injection molded cube with dimensions of 1 cm x 1 cm x 1 cm.

specific gravity
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This example shows that given the same weight, the lowest specific gravity material yields the greatest number of parts.

How does cost come into play? If all three materials are priced the same per pound (or kilogram), then Material X with the lowest specific gravity (and producing the greatest number of parts) is the most economical choice, given that it meets all other requirements for the application.

However, if the material prices are different, then the volume cost equation can be used as a short cut to determine which material offers the best value,  without calculating cost per part:

Volume Cost = Specific Gravity x Cost

volume cost

Material X has the highest price per pound, but has the lowest specific gravity, thus provides the best value. You can manufacture more parts per pound or more parts per dollar of material.

The pricing of Material Z is much more attractive, at 40 cents less per lb., but its specific gravity has a greater influence, resulting in the highest overall manufacturing costs between the three options.

Therefore, it’s very important to understand the real costs as you select materials for an application or evaluate alternatives, by factoring in specific gravity with volume costing. Relying on the price per pound alone may lead to poor choices and costly mistakes.

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