How do you calculate source inspection cost?

Multiply inspection hours by the loaded rate and by lot coverage percent for the variable cost, then add the fixed coordination and travel adder. Eight hours at $95/hr at 90% coverage plus a $600 adder totals $1,284.

What does 'loaded' hourly rate mean here?

It's the fully burdened cost of the inspector — wages plus benefits, overhead, and equipment — not just base pay. Using an unloaded rate understates the true cost of the visit.

Why does lot coverage reduce the variable cost?

Coverage scales the inspection effort applied to the lot. At 90% coverage the variable portion is $684 rather than the full $760, reflecting that a fraction of the lot is sampled rather than 100% checked.

Variable vs fixed source inspection cost?

The variable cost ($684) moves with hours, rate, and coverage; the fixed adder ($600) is travel and coordination that you pay regardless of lot size. Together they make the $1,284 total.

What is the cost per inspection hour in this example?

Dividing the $1,284 total by 8 hours gives $160.50 per inspection hour — well above the $95 rate because the fixed travel adder is spread across the visit.

When is source inspection worth the cost?

When the cost of an escape — line stoppage, recall, or customer charge-back — far exceeds the visit cost, or when a customer mandates it. Compare the $1,284 against your expected cost of a missed defect.

Supplier Quality, Development & Audits calculator

Source Inspection Cost Calculator

Source inspection cost is the total spend to send an inspector to a supplier and verify a lot at the source before it ships. SQEs and procurement use it to decide whether source inspection is worth it versus dock-to-stock plus incoming inspection, and to build accurate quotes for customer-directed source inspection. The calculator combines loaded inspector hours scaled by how much of the lot is actually covered, then adds fixed coordination and travel costs. It separates the variable inspection cost from the fixed adder so you can see what drives the total.

What this calculator does

Estimates the cost of inspecting and releasing parts at the supplier's site before shipment.
A receiving quality lead uses it to budget source inspection for a critical lot that cannot be reworked after delivery.
It totals a source-inspection visit's cost from inspector hours, loaded rate, lot coverage, and a fixed coordination/travel adder, and splits variable from fixed cost.

Formula used

Total source inspection cost = inspection hours x hourly rate x lot coverage% + coordination adder
Cost per inspection hour = total source inspection cost / inspection hours

Inputs explained

On-site inspection hours per visit:
Loaded inspector hourly rate:
Lot coverage inspected on the visit:
Coordination and travel adder:

How to use the result

Use it to decide between source inspection and incoming inspection, or to quote customer-directed source inspection accurately.
It models a single visit at an average rate; it doesn't capture rework, retest, or the cost of an escape if the sampled coverage misses a defect.

Current U.S. benchmarks

U.S. manufacturing runs at 75.6% of capacity (Federal Reserve, May 2026). New factory orders are up 2.3% year over year (Census).

Common questions

How do you calculate source inspection cost? Multiply inspection hours by the loaded rate and by lot coverage percent for the variable cost, then add the fixed coordination and travel adder. Eight hours at $95/hr at 90% coverage plus a $600 adder totals $1,284.
What does 'loaded' hourly rate mean here? It's the fully burdened cost of the inspector — wages plus benefits, overhead, and equipment — not just base pay. Using an unloaded rate understates the true cost of the visit.
Why does lot coverage reduce the variable cost? Coverage scales the inspection effort applied to the lot. At 90% coverage the variable portion is $684 rather than the full $760, reflecting that a fraction of the lot is sampled rather than 100% checked.
Variable vs fixed source inspection cost? The variable cost ($684) moves with hours, rate, and coverage; the fixed adder ($600) is travel and coordination that you pay regardless of lot size. Together they make the $1,284 total.
What is the cost per inspection hour in this example? Dividing the $1,284 total by 8 hours gives $160.50 per inspection hour — well above the $95 rate because the fixed travel adder is spread across the visit.

Last reviewed 2026-05-12.