The concept of utility in economics is very similar to the customer-oriented definition of quality. Although quality is more commonly used than utility in businesses, quality is rarely expressed mathematically as clear as utility. On the other hand, the Slutsky Equation in microeconomics demonstrates the effects of utility on levels of demand and product substitution. Better quality is believed to result in higher levels of demand and product substitution. It is of interest to explore the relationship between quality and utility. The Slutsky Equation can be modified to show that quality also influences the levels of demand and product substitution. In addition, since the levels of demand and product substitution also affect productivity, it is likely to explain the positive relationship between quality and productivity from the viewpoint of microeconomics. This would be helpful in clarifying the misconception prevalent in businesses that the goals of quality and productivity are conflicting.
|Number of pages||6|
|State||Published - 1997|
|Event||Proceedings of the 1997 6th Annual Industrial Engineering Research Conference, IERC - Miami Beach, FL, USA|
Duration: May 17 1997 → May 18 1997
|Conference||Proceedings of the 1997 6th Annual Industrial Engineering Research Conference, IERC|
|City||Miami Beach, FL, USA|
|Period||05/17/97 → 05/18/97|