Every defective part costs you twice: once in the hours someone spends fixing it, and again when a part can't be saved and goes to scrap. Neither shows up as one line in the accounts. Rework hides in wages and scrap hides in material consumption. This calculator adds the two up, so you can see what your daily defects cost in rupees a year.
How the calculator works
The calculator takes six inputs:
- Defective parts per day. All parts that fail inspection on the first pass, whether they are later reworked or scrapped.
- Rework minutes per part. The average hands-on time to fix one defective part: stripping, re-machining, re-stitching, re-soldering, re-inspection.
- Labour cost, all-in (₹/h). What one hour of the person doing the rework costs you, including employer contributions and bonus, not just basic pay.
- Share ending as scrap (%). The share of defective parts that cannot be saved.
- Cost of a scrapped part (₹). Material plus the processing already put into the part before it was rejected.
- Working days a year.
The formulas:
Parts reworked a day = defective parts × (1 − scrap share)
Rework hours a day = parts reworked × rework minutes ÷ 60
Rework labour per year = rework hours a day × labour cost per hour × working days
Scrap per year = defective parts × scrap share × cost of a scrapped part × working days
Total = rework labour per year + scrap per year
Only the parts that are saved are counted as rework hours. Scrapped parts are counted only at their scrap cost, so a part is never charged twice.
Worked example (India)
A machining and assembly unit in Haryana. All figures are assumptions for illustration and match the calculator's defaults, except the wage floor, which comes from Haryana's minimum wage order.
Where ₹150 an hour comes from. Haryana's basic minimum wage from 1 April 2026 is ₹16,780.74 a month (₹645.41 a day) for semi-skilled and ₹18,500.81 a month (₹711.56 a day) for skilled workers (Haryana Labour Department notification No. 2/25/26-2 Lab of 9 April 2026, Haryana Government Gazette copy). Over an 8-hour day, or 26 days × 8 hours (208 hours) a month, that is about ₹81 and ₹89 an hour. Rework is often done by an experienced hand paid above the floor, and the employer also pays contributions and bonus on top. We assume ₹150 an hour all-in, roughly 1.7 times the skilled floor. Use your own payroll figure, and your own state's order if you are outside Haryana.
| Input | Value | Basis |
|---|---|---|
| Defective parts per day | 60 | assumption |
| Rework minutes per part | 12 | assumption |
| Labour cost, all-in | ₹150/h | assumption, above the Haryana skilled floor of ~₹89/h |
| Share ending as scrap | 15% | assumption |
| Cost of a scrapped part | ₹220 | assumption: material plus processing to date |
| Working days a year | 300 | assumption |
| Parts reworked a day | 51 | 60 × 85% |
| Rework hours a day | 10.2 h | 51 × 12 ÷ 60 |
| Rework labour per year | ₹4.59 lakh | 10.2 × ₹150 × 300 |
| Scrap per year | ₹5.94 lakh | 60 × 15% × ₹220 × 300 = 9 parts × ₹220 × 300 |
| Total per year | ₹10.53 lakh | 4.59 + 5.94 |
Two things stand out. First, 10.2 rework hours a day is more than one full-time person doing nothing but fixing parts that should have been right first time. Second, only 15% of the defects go to scrap, but they cost more than the 85% that are reworked. That is because the scrapped parts take their material and all the machining with them. In shops with expensive material (castings, forgings, stainless), it is usually the scrap share, not the rework minutes, that moves the total.
What typical numbers look like
- Cost of poor quality overall. The American Society for Quality (ASQ) says "many organizations will have true quality-related costs as high as 15-20% of sales revenue, some going as high as 40% of total operations", and gives a rule of thumb that costs of poor quality in a thriving company are about 10–15% of operations. That covers all quality costs (prevention, inspection, internal and external failure), not only rework and scrap, and it is a general guideline rather than an Indian survey.
- Indian defect and rework rates. We found no credible public survey of typical rejection rates, rework minutes or scrap shares for Indian MSMEs. Customer quality manuals set PPM targets per supplier, but those are targets, not measured averages. Measure your own from rejection registers.
What this number does not tell you
- The cost of the machine time. The calculator counts the rework person's hours, not the machine. If rework goes back onto a CNC or a press, it takes capacity from new orders. On a bottleneck machine, that lost capacity can be worth more than the labour, which an OEE calculation values separately through its quality factor (the OEE calculator puts a rupee figure on it).
- Costs further downstream. Customer returns, line-stoppage debits, sorting at the customer's site, premium freight and the cost of a lost account are not in the formula. A defect that escapes the factory usually costs far more than one caught inside it.
- Whether the scrap value is net. If scrapped parts are sold as metal scrap or regrind, subtract that recovery from the scrap cost per part.
- Why parts are defective. Setup, tool wear, material and handling need different fixes. The rupee total tells you how big the problem is, not where it starts.
- Whether your defect count is complete. Parts fixed at the machine by the operator, without going through inspection, rarely reach the rejection register. The real rework hours are usually higher than recorded.
- What a camera can and cannot see. A camera can show where parts pile up waiting for rework, how long a rework bench stays busy and when a machine is running reworked parts instead of new ones. It cannot measure a dimension or find a hidden defect; that still needs gauges and inspection.
Related guides
- What a 3% Rejection Rate Really Costs an Indian CNC Shop (₹)
- Runners, Purge and Rejects: What Regrind and Scrap Really Cost an Indian Moulding Plant (₹)
- Catching Quality Problems on the Line with Cameras
- OEE Explained for Indian Factories (with a Rupee Example)
- Machine hour rate calculator
FAQ
How do you calculate rework cost? Multiply the number of parts reworked a day by the minutes each takes, divide by 60, then multiply by the all-in hourly labour cost and the working days. For 51 parts at 12 minutes, ₹150 an hour and 300 days, that is ₹4.59 lakh a year.
What is the difference between rework and scrap cost? Rework cost is the labour (and sometimes machine time) spent fixing a defective part so it can be sold. Scrap cost is the material and processing lost when a part cannot be saved. The calculator counts each defective part as one or the other, never both.
What labour rate should I use for rework in India? Use your actual all-in cost per hour for the person who does the rework: wages plus employer contributions and bonus. Your state's minimum wage order gives the floor; in Haryana from April 2026 the skilled basic minimum works out to about ₹89 an hour over a 208-hour month.
What is a normal cost of poor quality? ASQ says many organisations have total quality-related costs as high as 15–20% of sales revenue. No credible public benchmark exists for Indian MSMEs specifically, so track your own rejection register.
Should I count the machine time used for rework? Yes, if rework goes back onto production machines. This calculator counts only the labour. Add the machine hours at your machine hour rate, especially if the machine is your bottleneck.
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