On-Hand Raw Material

[PineLane]

Not sure if I can convey the question, but I'll try...still kinda new to the biz side and trying to figure out the best way.

Scenario...Customer calls and wants x number of pieces cut out of Y gauge. I calc. the purchase price, purchase the steel, cut the parts and get paid. Everybody's happy. On this particular order...I used only 1/2 of that 4x8 sheet. That 4x4 goes into my inventory for a time period...say a couple months. Two month later, a different customer comes in and wants a number of pieces cut from the same Y gauge, but the leftover 4x4 sheet is not enough to cover the order, so I go and purchase another 4x8 sheet. Due to the market, the price has drastically changed and has increased/decreased, but in the meantime I'm trying to figure out the best way to keep track of a bunch of 1/2 sheets, 1/4's, whatever and the the price associated with THAT piece of material, so I don't either under or overcharge on THAT particular sheet of material

That's my question...how to keep track and associate which price goes with what material ? If I pay more for the first sheet and the next sheet purchased a few month's later is less...I'm losing money if I charge the 4x4 sheet at the new lower price.

I know...my description is a bit confusing, but I'm trying to figure out how to best keep track of pieces of whole sheets and the price associated with each, so to minimize loss.

Thanks

[CNCCAJUN]

For any calculations, regardless of your mark-up, you should always view on hand material from a "current real replacement cost" prospective.
Steve

[weldor2005]

The material you have in stock is just that, it is STOCK, which goes up and down with value regardless of purchase price. This goes true for when you figure out inventory costs and net business worth. So, if you want to play it safe if you will, and the customers will pay it, then you try to balance this out with your mark up. If you really are afraid to keep it around, you could have the customer buy the whole sheet and give them the second half.

[wickedinhere]

Yep always charge what it would cost you to replace your material used. Here the prices normally don't go up or down to much. I always buy 5-6 sheets when i make a metal run.

[weldor2005]

The term buy low sell high works if you got room to store material. Buy it in bulk when material cost is low, and then as you use it it may go up in price, may stay same. Hopefully you make out better.

[PineLane]

Appreciate the responses. Makes sense after having it explained...thanks !

[mdwalker]

I always charge current price on steel. I use the spreadsheet that I posted on here several years back. When calculating the price of an item the price for the steel is calculated at 150% of current cost. When I calculate the size of an item I basically draw a rectangle around the item regardless of the shape and use those measurements as the basis for the amount of steel used. Actually I usually add 1/2" to it. By the time I get 1/2 sheet of steel left over it has usually paid for itself many times over.