A multidimensional approach to manufacturing quality

In this paper, we examine the conditions under which it is profitable for a firm to invest in a quality-improvement program. To do this, we model quality along two dimensions: product performance (measured by deviation 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-related penalties and cost associated with defects. In this setting, we identify cases in which there is a positive net gain from altering the quality trade-off via a quality-improvement program such as Total Quality Management (TQM).