2.4.1 Total Cost in Material Selection In many cases, economic selection among materials cannot be based solely on the costs of materials. Frequently, a change in materials will affect the design and processing costs, and shipping costs may also be altered. Care should be taken in making economic selections between materials to ensure that any differences in shipping costs, yields, or resulting scrap are taken into account. Commonly, alternative materials do not come in the same stock sizes, such as sheet sizes and bar lengths. This may considerably affect the yield obtained from a given weight of material. Similarly, the resulting scrap may differ for various materials. In addition to deciding what material a product should be made of, there are often alternative methods or machines that can be used to produce the product, which, in turn, can impact processing costs.  What could be the factors affecting the cost of materials that one should consider?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 10E
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2.4.1 Total Cost in Material Selection
In many cases, economic selection among materials cannot be based solely on the costs of
materials. Frequently, a change in materials will affect the design and processing costs, and shipping costs
may also be altered.
Care should be taken in making economic selections between materials to ensure that any
differences in shipping costs, yields, or resulting scrap are taken into account. Commonly, alternative
materials do not come in the same stock sizes, such as sheet sizes and bar lengths. This may considerably
affect the yield obtained from a given weight of material. Similarly, the resulting scrap may differ for
various materials.
In addition to deciding what material a product should be made of, there are often alternative
methods or machines that can be used to produce the product, which, in turn, can impact processing
costs. 

What could be the factors affecting the cost of materials that one should consider? 

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