STRATEGY OF MANUFACTURING QUALITY DIFFUSION IN A TIME VARIANT MARKET

摘要

Quality of product is one of the major decision variables among the consumer's product choice decisions. Because of this fact, a considerable number of manufacturers set up their own predetermined quality improvement target value. If the consumer's target value is different from that of the manufacturers', then the difference can affect the rate of demand. Therefore, it is important for manufacturers to recognize what the best quality improvement level is in order to increase the demand and decrease the cost of production. In this paper, we develop a model to find the optimal policy connected with process improvement efforts and market demand. A continuous time, finite-horizon, profit-maximization model is used by applying the Maximum Principle.