Isn't the point of inspection so that you can perform a REJECT, based on some rejection rate parameter ( which is chosen by business economic reality )
This is the core of the TQM/Six Sigma theory
This is the core of the TQM/Six Sigma theory
You will always have some product that needs to be reworked or rejected. The goal is to ensure quality at every stage in order to reduce the amount of rework. You don't want to go the way of the old US car companies who had to suffer major setbacks in the market because they were spending gross amounts of time reworking defective cars before they could ship them. I do not have a copy of it in front of me, but one of Womack's books had some numbers. Double digit percentage of time for a car's production was spent reworking the car after it had been made to make it suitable for sale.
Now, a premise of Agile (and Lean) is to improve the feedback loop. This is where testing and other inspections come into play. By doing them more often (run unit tests on check in, reject if any formerly passing tests start failing, for instance) you can address some quality concerns earlier.
But you still have to address the cause of the rejections. If Stage 10 of production consistently requires rework, it's great that you're catching, addressing, and doing the rework right then. At least it's better than after Stage 20. But management has to work with QA to not just inspect and accept/reject, they have to address the systemic causes of the failure.