Date of Original Version



Technical Report

Rights Management

All Rights Reserved

Abstract or Description

Abstract: "Due to several possible production modes, an industrial output may have different quality levels. We present a method to select the optimum production mode, based on cost and quality considerations. We introduce the idea of a Pareto efficient quality level that we relate with the concept of value loss. The traditional tradeoff cost versus quality is studied in a formalism that allows industrial quality to be treated as an economic variable. For validation and forecasting purposes, the effects of quality differences are studied in various contexts: perfect competitive market, monopoly, and oligopoly situation. In each case, consequences are drawn in terms of prices and profits. Depending on the economic situation considered, failure to produce at the Pareto efficient quality level is shown to have different detrimental effects."