This paper presents an imperfect manufacturing system in which production ability can produce items in m production setups and rework the imperfect quality items in one rework setup. Rework is one of the main issues in reverse logistic and green supply chain to reduce production cost and environmental problem. The aim of this research is to minimize the total inventory cost by determining the optimal cycle time and the optimal number of production setups. The convexity of the inventory model is derived by using mathematical software. The result is illustrated with numerical example for the model. The effects of the problem parameters upon the optimal solution are examined numerically. This model can be applied to optimizing the total inventory cost for the business enterprises where production rate and demand rate are time dependent and salvage value is incorporated to the deteriorated items.