This article seeks to synthesise two disparate views of the cost of quality into one theory. The two views of quality are that higher quality costs more and that higher quality can eliminate certain costs thereby reducing total costs. The theory promulgated by this paper proposes that both views are true but each applies to a different dimension of quality. This theory is tested by examining the cost of improved quality of a truckload carrier's customer service. A transcendental logarithmic cost function, which includes a variable for each dimension of quality, is estimated to test the hypotheses that the physical capacity dimension of quality is directly related to costs and the human performance dimension of quality is inversely related to costs. Results of this estimation support the two hypotheses and give carrier managers an idea of how much it should cost or save them to improve either of the two dimensions of service quality.
This research paper examines the statistical relationship between clay to day performance and effi ciency measures and financial performance in the motor carrier industry. Key findings are that carriers with more miles per tractor per year, a larger average length of haul, more revenue per mile, and more revenue per tractor per week tend to perform better financially as measured in three separate models by operating ratio, return on assets, or return on equity. Unexpectedly, for the eight publicly traded carriers included in the analysis, there was a negative relationship between empty mile percentage and financial performance, indicating that carriers with a higher empty mile percentage have better financial perfor mance. Possible explanations for these counterintuitive results could be due to a focus on better cus tomer service or driver satisfaction causing slight increases in empty miles. Therefore the increased costs resulting from empty miles could be offset by higher revenue or decreased costs in other aspects of the operation. These results suggest that managers should focus not on minimizing empty miles but rather on keeping them within an acceptable range.
The early experience of the airline industry under deregulation was very much as expected, with increased competition and new entrants offering highly competitive rates. However, there are approximately 130 airlines operating today, and the industry remains more heavily concentrated than it was prior to deregulation. This study reports on concentration in the US airline industry between 1970 and 2009, as measured by the Hcrfindahl-Hirschman Index (HHI) and Concentration Ratio, together with changes in industry costs. The results show a trend of industry-wide reduced costs per available seat mile that is negatively correlated with the increased level of industry output over the last 30 years and increased concentration, which demonstrate the need for more research into the question of scale economies in air transportation.
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