An optimal control model with defective products and goodwill damages

In this paper, we formulate an optimal control model that considers the negative effect of product failures on goodwill. Differently from the models developed in the literature, we replicate Juran’s (Quality control handbook, McGraw Hill, New York, 1979) and Crosby’s (Quality is free, McGraw-Hill, New York, 1979) conformance quality models. Our findings suggest that a total quality management orientation should always consider an appraisal and prevention strategy to avoid the negative effect of defects on goodwill.