Matrik: Jurnal Manajemen, Strategi Bisnis, Dan Kewirausahaan
Vol. 19 No. 2 (2025)

INCENTIVE MECHANISM FOR QUALITY INSPECTION: A LINEAR PROGRAMMING APPROACH

I Nyoman Sutapa (Petra Christian University)
I Gede Riana (Udayana University)
Magdalena Wullur (Sam Ratulangi University)
Indriati Njoto Bisono (Petra Christian University)



Article Info

Publish Date
12 Sep 2025

Abstract

This study develops an incentive mechanism model for outsourced personnel in product quality inspection, based on a principal-agent relationship. The core challenge lies in misaligned incentives, where agents often prioritize output volume over quality. By integrating Mechanism Design Theory (MDT) and Linear Programming (LP), our model aligns the principal's objective of minimizing defective products with the agent's utility maximization, subject to Incentive Compatibility and Individual Rationality constraints. Our analysis reveals that the optimal incentive structure combines a basic wage with a performance-based bonus. The optimal effort level of outsourced personnel increases with both rising losses due to defective products and enhanced detection effort effectiveness. The model also shows that optimal inspection allocation should be assigned to personnel with higher capabilities, especially for high-risk products. This research provides a theoretical contribution by integrating MDT and LP for incentive design and offers practical implications for improving product quality through a measurable incentive framework.

Copyrights © 2025






Journal Info

Abbrev

jmbk

Publisher

Subject

Decision Sciences, Operations Research & Management Economics, Econometrics & Finance

Description

MATRIK: JURNAL MANAJEMEN, STRATEGI BISNIS, DAN KEWIRAUSAHAAN aims as a medium of exchange of information and scientific works among the teaching staff, alumni, students, practitioners and observers of science in management, business strategy and entrepreneurship. MATRIK: JURNAL MANAJEMEN, STRATEGI ...