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This article presents a dynamic model of decision-making on Quality Costs, using the concepts of the Complexity Theory, consistent with the PAF models (Prevention Appraisal-Failures) and with the “optimum” derivation feature (generally towards Zero Defects).

After a literature review and the mathematical model development, this model was simulated in several situations and the results were evaluated, producing new insights.

The results show that the larger the delay between action and reaction "t" is, the more complex the system will be, and the effects of the decisions are experienced for “k” later periods, but for some specific “t” a dynamic balance is possible.

The strategy is immutable. The quantity produced is not a variable in the model. The investment amount “x” is fixed.

This model is original due to the use of the Complexity Theory, and also to show that the optimum in terms of quality costs can be a positive value or Zero Defects, being in fact a moving target, depending on external conditions. The model value lies in the fact that it is dynamic, so closer to the reality of decision-making enterprises, and for revealing the importance of factors involved with complexity has, such as the time lag "t" for the success of management strategies of Quality Costs.

The purpose of this paper is to critically examine existing models for cost of quality. Having identified issues and limitations of historic models, develop and implement a novel, structured hybrid cost of quality model to identify and effectively manage cost of company’s product.

A theoretical framework is proposed based on an integration of three existing, historical cost of quality models into a structured hybrid model. Subsequently, an exploratory pilot case study in a manufacturing environment is described that illustrates the value of the model.

The paper manages to find how a hybrid model can help identify cost of quality more accurately than the traditional models. Thanks to the new model, the author shows how gaps between product’s theoretical and actual costs can be highlighted. This allows management to drive down cost of quality and improve business performance.

The model would benefit from a company-wide implementation. The present study provides a starting point for further research in the international manufacturing sector.

The framework improves the knowledge of cost of quality by providing a new case study with full results and analysis from a UK-based manufacturing company. It provides a critical re-evaluation of available literature, including the most recent publications as far as practically possible within timescale available. The study shows the importance of comprehensive cost collection if companies are to have the right data needed to manage business excellence.

The paper presents a development of the first structured hybrid model for measuring cost of quality using the strongest points of main three approaches and addresses their limitations. It gives new arguments against allocation of some cost elements within BS 6143-2:1990, resulting in recommendations for further brainstorming of pros and cons of the suggestion.