AbstractThis paper provides a complete framework to consider manufacturing, inspection and rework activities in two-stage transfer-line production systems. The purpose of this paper is to analyse some of the transient state characteristics of a two-stage production system subject to an initial buffer of infinite capacity, inspection at both the inter- and end-stages and rework. The first stage of the system is never starved and the second stage is never blocked. A stochastic model is developed to analyse the system and explicit analytical expressions for some of the system characteristics have been obtained using the state-space method and regeneration point technique. All the random variables involved in the analysis are assumed to be arbitrary (general). Numerical illustrations have also been presented for some particular cases.