Fu Qiang Yang

Date of Graduation

1991

Document Type

Thesis

Abstract

The purpose of this research is to develop a general approach to quality economics in Total Quality Control. Based on microeconomics theory and the development of prevailing quality control approaches, the research develops a set of economic quality concepts which provide a solid theoretical base for economic design and evaluation in quality control. A number of quality economics modeling procedures are established in the phases of both the consumer's and the producer's decision makings on product quality as well as their interactions. In the context of a total quality control approach, the research first analyzes consumer behavior under quality discrimination and derives expected quality value, consumer quality loss function, consumer quality surplus, and the consumer quality decision model. Results will provide a useful means for measurement of quality loss and its effect on consumer welfare as well as information on consumer assessment of product quality. This research also analyzes the producer's behavior under quality risk in an increasingly competitive market and provides both general and approximate forms of the production loss function. Conventional approaches to the analysis of the producer's optimal behavior may not be adequate to illustrate product quality setting and producer behavior in quality competition. A consumer-based approach is established and employed to implement multi-competitive advantages in higher quality setting, lower cost and better consumer satisfaction. The effects of producers' production/market quality strategies, with which the producer affects consumers' quality decisions, is studied and modeled. This research provides theoretical guidance for quality activity in an environment of increased competition. It also offers a set of simplified and computable functions to be applied in quality control practices.

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