We study an integrated production-inventory system that manufactures new items of a certain product and receives some of the used items back. These can be either remanufactured on the same production line or disposed of. Used items awaiting remanufacturing need to be held in stock. New and as-good-as-new items are kept in stock, from which the product demand is satisfied. Controlling such a system involves decisions with regard to disposal of used items, succession of manufacturing and remanufacturing operations, and the choice of respective lot sizes. Recent works have referred to settings assuming variation in quality of returned items and a limited number of remanufacturing cycles that an item can undergo. We seek to determine optimal lot sizing for such a system and derive sufficient conditions for an optimal policy to forego remanufacturing.