The paper investigates a production‐inventory model where regular preventive maintenance starts at the end of production for smooth functioning in the next cycle. During production run time, the manufacturing system may shift from “in‐control” state to “out‐of‐control” state after a certain time. The manufacturing system produces imperfect quality products during “in‐control” state and “out‐of‐control” state with different rates, and these imperfect quality products are reworked at costs in parallel system. The whole items are sold with free minimal repair warranty if any fault arises after sale. This study extends and corrects the Sana's production‐inventory model and derives optimal buffer inventory to minimize the expected costs per unit item. A numerical illustration with its sensitivity analysis of the key parameters is studied to justify the proposed model.
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