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What do you do with the mal-function items in your shop?

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Do you have malfunctioning items in your business? And if there are, what do you do to them? Are you going to throw them in the trash or keep them? Well, I interviewed someone who owned a shop full of home appliances and saw him drilling a kettle and pots. I also saw other workers preparing small items . I thought that a business like that wouldn't do something like preparing because the buyer's money is not stones. And should they sell back the broken items? The answer to my doubt was, that they sell the repaired products at a very low price rather than losing a bigger amount. Would you buy a repaired item?
 
I want to ask how the malfunctioning products got into the stock of the business in the first instance.
 
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