I was trying out the different suggestions made by you and below are the results:
1) I tried with a lower velocity but the result was same. The tool mesh penetrated into the work piece after sometime and it stopped the cutting.
2) I tried with smaller time steps. I did this by reducing the time step safety factor. Still the same result. I have attached a video for the same with 0.7 safety factor and 1m/s velocity.
3) In the 3D model, when I set the chip to Euler Domain, I can no longer apply any boundary conditions to it. Since, we need to constrain all Z DOFs, I tired to apply a displacement condition on the face but I couldn't. Would the model be still valid as a 2D plain strain model if I am unable to constrain Z DOF? In abaqus (I only have the student version), it allows ALE meshing and constraints on a Euler domain.
I would greatly appreciate your input. I have to make a decision on what FEM tools must I use going forward and do not want to exhaust resources on other licenses if I am able to generate required results using our existing ANSYS license.
Looking forward to your response.