Logo Logo

Incentives for Quality through Endogenous Routing, Manufacturing & Service Operations Management (M&SOM)

Abstract

This paper examines how internal competiton and judicious rework allocation can improve qualty and bottom line results. It is motivated by the practive of a service operations firm, Memphis Auto Auctions. MAA uses a non conventional rework allocation process, according to which each team is paid only if the work is of good quality. All payments for units that are reworked are made to the competing (other)team. This internal competition contrasts with the conventional one, that assigns rework back to the original one. In this paper, we investigate quality improvement incentives of the this rework allocation and payment scheme.

Type

Article

Author(s)

Lauren Xiaoyuan Lu, Jan A. Van Mieghem, R.Canan Savaskan-Ebert

Date Published

2009

Citations

Lu, Lauren Xiaoyuan, Jan A. Van Mieghem, and R.Canan Savaskan-Ebert. 2009. Incentives for Quality through Endogenous Routing. Manufacturing & Service Operations Management (M&SOM) . 11(2): 254-273.

KELLOGG INSIGHT

Explore leading research and ideas

Find articles, podcast episodes, and videos that spark ideas in lifelong learners, and inspire those looking to advance in their careers.
learn more

COURSE CATALOG

Review Courses & Schedules

Access information about specific courses and their schedules by viewing the interactive course scheduler tool.
LEARN MORE

DEGREE PROGRAMS

Discover the path to your goals

Whether you choose our Full-Time, Part-Time or Executive MBA program, you’ll enjoy the same unparalleled education, exceptional faculty and distinctive culture.
learn more