The correct answer is: C. rework
Rework is the process of repairing or modifying a product that does not meet specifications so that it can be sold as a finished good. It is a common practice in manufacturing, and can be used to correct defects that were caused by errors in the production process or by customer damage.
Reduced work is the process of reducing the production of a product due to a decrease in demand. This can be done by temporarily shutting down production or by reducing the number of hours that employees work.
Spoilage is the loss of a product due to damage or deterioration. This can be caused by a variety of factors, such as improper storage, handling, or processing.
Scrap is a product that is no longer usable and must be discarded. This can be due to defects, damage, or obsolescence.
In the case of production units that do not meet customer specifications, but can be sold to other customers as finished goods, the correct answer is rework. This is because the units can be repaired or modified so that they meet the specifications of other customers. The other options are incorrect because they do not describe the situation in the question.