In practices, not only production but inspection processes are often not perfect, thereby generating defects and inspection errors. Previous imperfect-quality inventory studies, however, have mostly focused on developing cost-minimizing models that do not consider imperfect inspection processes...

This study examines an imperfect production and inspection system with customer return and defective disposal. We develop an optimal lot sizing model with production and inspection quality investment, incorporating all the quality costs. We find the optimal lot size, rework frequency, defective...