The determination of the quality target for a manufacturing process represents an intricate and fiscally vital decision. Although the quality characteristics of the finished product may satisfy consumer expectations when the process target is set high, the raw material and production costs necessary to maintain such high quality levels may prove prohibitively expensive. Conversely, while the manufacturer may avoid excessive production costs by setting lower process targets, the finished product's quality characteristics may not meet the customer's specifications. This study considers the rework costs in the expected profit function. This study also determines the ”critical value of rework”, in which when the rework cost is greater than this critical value, then the expected profit would be decreased. A method for identifying the optimal process target that reflects holding costs and rework costs is presented and illustrated by the example.