A MULTIDIMENSIONAL APPROACH TO MANUFACTURING QUALITY

In this paper. we examine the conditions under which it is profitable for a firm reinvest in a quality-improvement program. To do this. we m odel quality along two dimensions: product performance (measured by de viation from an acceptable base performance level), and timeliness of product delivery (measured by time-related penalties such as lateness or tardiness). This explicit quality formulation is incorporated into a profit maximization framework in which it is necessary to weigh the revenue associated with each job against its cost in terms of time-rel ated penalties and cost associated with defects. In this setting, we i dentify cases in which there is a positive net gain from altering the quality trade-off via a quality improvement program such as Total Qual ity Management (TQM). (C) 1997 Elsevier Science Ltd.