What is 'lowest value principle' in SAP MM - Materials Management?

lowest value principle - Overview

• Component: MM

• Component Name: Materials Management

• Description: A valuation principle in which the lower of two possible valuation rates either MUST be used strict lowest value principle or CAN be used moderate lowest value principle.

lowest value principle - Details

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  Key Concepts: 
  The Lowest Value Principle is a concept used in Materials Management (MM) in SAP. It states that when multiple materials are available for a certain requirement, the material with the lowest value should be chosen. This principle is used to ensure that the most cost-effective material is chosen for a given requirement. 
  
  How to use it: 
  The Lowest Value Principle can be used in SAP Materials Management when selecting materials for a certain requirement. When multiple materials are available, the system will automatically select the material with the lowest value. This ensures that the most cost-effective material is chosen for the requirement. 
  
  Tips & Tricks: 
  When using the Lowest Value Principle, it is important to consider other factors such as quality and availability of materials. It is also important to consider any additional costs associated with using a particular material, such as shipping or handling costs. 
  
  Related Information: 
  The Lowest Value Principle is closely related to other concepts such as Total Cost of Ownership (TCO) and Life Cycle Costing (LCC). These concepts are used to evaluate the total cost of ownership of a particular material over its lifetime.