The process of compaction of machining chips inside a cylindrical processing chamber is investigated. This process can be either an independent process or the first step in the Friction Extrusion Process (FEP) where the consolidated chips are softened due to frictional heating and are turned into a wire through an extrusion hole in the die. The current study provides an extension to our previous study in order to determine experimentally the Poisson's ratio as a function of the relative density during compaction. This determination is done through measurements of strains on the outer surface of the processing chamber containing the machining chips. The elastic theory of a thick-walled cylinder under internal pressure is employed to relate the surface strain measurements to stress and strain states at the processing chamber-chips interface. Also, the loading machine compliance effect is removed from the compaction and uniaxial test results whereas in the previous work it is implicitly assumed that the loading machine is rigid so that the measured axial deformation is taken to be entirely due to the deformation of the compacted chips. The porous elastic-plastic material model developed previously is extended to model the mechanical behavior of the chips during the compaction process. Simulation predictions of the axial stress-strain curves are performed and the predicted data are found to have a good agreement with experimental data.