Quality Management in a Three-Level Supply Chain: The Role of Methods and Costs

Xiang Wan (), Kefeng Xu (), Yang Dong and Philip Evers
Additional contact information
Xiang Wan: Marquette University
Kefeng Xu: UTSA

Working Papers from College of Business, University of Texas at San Antonio

Abstract: While various techniques for improving product quality have been proposed, the supply chain network is often taken for granted. This paper considers quality control within a three-level supply chain and provides interesting findings that differ from the existing literature. Results suggest a curvilinear relationship between quality improvement efforts in the supply chain and brand owner profit: maximum efforts by the supplier and manufacturer do not guarantee optimal profit for the brand owner. Furthermore, two quality control methods - appraisal and certification - are examined. The quality control methods are found to affect both finished product quality and brand owner profit, but their impacts are moderated by the external failure cost of finished products. Results also suggest that no one particular quality control method dominates in terms of improving finished product quality or raising firm profitability. The optimal quality control method depends on the external product failure cost and other contextual factors in the supply chain.

Keywords: Quality management; Simulation; Three-level supply chains. (search for similar items in EconPapers)
JEL-codes: C63 D81 D82 L14 L15 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2014
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Citations: View citations in EconPapers (1)

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