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| Author: | Voros, J. |
| Title: | Product balancing under conditions of quality inflation, cost pressures and growth strategies |
| Journal: | European Journal of Operational Research
2002 : AUG, VOL. 141:1, p. 153-166 |
| Index terms: | QUALITY STRATEGY MONOPOLY COMPETITION |
| Language: | eng |
| Abstract: | This paper analyzes an organization that has a well- defined strategy providing a sustainable competitive advantage. This advantage is expressed by at least one dimension of quality on which the product or service exhibits outstanding performance. Using decreasing and increasing exponential demand functions for price and quality, respectively, the optimal quality level is characterized when dollar sales volume (under a cost- based price floor) and profit are maximized. However, as quality inflates, the same quality performance is worth less tomorrow than today. This paper shows that continuous and simultaneous improvement of operational efficiency and quality is a must and is independent from price setting policies. |
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