This paper describes in detail about the rescheduling of production process due to the failure of cutting tool or machine breakdown during an automated batchproduction. In general flexible manufacturing system is incorporated in the production process to achieve the desired rate ofproduction without anydistortions during the production process. Rescheduling of production process takes place due to the following factors; poor tool life, wear in machinecomponent, poor tool grinding, tool breakdown and machine repair. In the above stated factors, tool breakdown is the most common problem faced duringmost of the machining operation/production process. This paper deals in developing a algorithm to reschedule the production process during cutting toolbreakdown.