Reducing Quality Costs by Using Game Theory

Currently, both production and consumption are in a constant expansion due to intense and rapid globalization. The competition among producers has become extremely fierce, and staying in the market depends directly on the quality of manufactured and sold products. This can only be achieved through a deep understanding of customer requirements and maintaining a high standard of quality throughout the manufacturing chain, which entails additional costs that burden production expenses. The paper presents the main costs related to quality and identifies the timing and location of their occurrence in the technological process, establishing that staying competitive in the market is directly linked to the magnitude of these costs. Various strategies for keeping these costs under control in accordance with customer requirements and producer resources are presented. In the paper, a case study is carried out that presents a game theory model, resulting in a probabilistic control strategy that minimizes costs associated with quality control of products. It illustrates that lowering quality-related expenses can be accomplished by utilizing a selective product control strategy for producers and consumers. Production profitability is derived from the cost values of verification and penalties as outlined in the game theory model presented in the paper. The study results serve to guide the decision-making departments of producers in choosing the best control strategy to minimize the quality costs required for meeting the highest standards.