The intention of this article is to develop a framework of production policy (resumption and non-resumption) in order to find out optimal safety stock, optimal production rate and production lot size. It encompasses specific versions of the concept of quality and inventory model, stochastic machine breakdown and its correcting and regular repair paths with safety stocks. This framework hopefully serves to simplify answers to the important questions: How much safety stocks, production rate and production lot size are required to minimise the total expected system cost. The optimal production rate, production lot size, production run time and safety stocks are determined numerically and the joint effect of process deterioration, machine breakdown and its repair (correcting and preventive) on the optimal decision is investigated for a numerical example. Such an investigation should also yield logistics directions for the design of products and their manufacturing processes. © 2010 Taylor & Francis.