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Article

Thai Young Kim, Rommert Dekker and Christiaan Heij

The purpose of this paper is to show that intentional demand forecast bias can improve warehouse capacity planning and labour efficiency. It presents an empirical…

Abstract

Purpose

The purpose of this paper is to show that intentional demand forecast bias can improve warehouse capacity planning and labour efficiency. It presents an empirical methodology to detect and implement forecast bias.

Design/methodology/approach

A forecast model integrates historical demand information and expert forecasts to support active bias management. A non-linear relationship between labour productivity and forecast bias is employed to optimise efficiency. The business analytic methods are illustrated by a case study in a consumer electronics warehouse, supplemented by a survey among 30 warehouses.

Findings

Results indicate that warehouse management systematically over-forecasts order sizes. The case study shows that optimal bias for picking and loading is 30-70 per cent with efficiency gains of 5-10 per cent, whereas the labour-intensive packing stage does not benefit from bias. The survey results confirm productivity effects of forecast bias.

Research limitations/implications

Warehouse managers can apply the methodology in their own situation if they systematically register demand forecasts, actual order sizes and labour productivity per warehouse stage. Application is illustrated for a single warehouse, and studies for alternative product categories and labour processes are of interest.

Practical implications

Intentional forecast bias can lead to smoother workflows in warehouses and thus result in higher labour efficiency. Required data include historical data on demand forecasts, order sizes and labour productivity. Implementation depends on labour hiring strategies and cost structures.

Originality/value

Operational data support evidence-based warehouse labour management. The case study validates earlier conceptual studies based on artificial data.

Details

International Journal of Physical Distribution & Logistics Management, vol. 48 no. 1
Type: Research Article
ISSN: 0960-0035

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Article

Cristina Bernini and Andrea Guizzardi

The aims of the paper are to evaluate the relevance of environmental factors (seasonality, size and quality) on hotels’ performance and benchmarks; to measure the bias in…

Abstract

Purpose

The aims of the paper are to evaluate the relevance of environmental factors (seasonality, size and quality) on hotels’ performance and benchmarks; to measure the bias in efficiency resulting from a failure to control for these sources of heterogeneity; and to propose some managerial policies to handle for environmental heterogeneity.

Design/methodology/approach

The sample is constituted by 2,705 hotels operating in Emilia-Romagna (Italy). The metafrontier approach is used to identify the different production processes and measure technical efficiency scores.

Findings

Different production processes exist among accommodation firms due to environmental features; not considering heterogeneity in technological sets produces high levels of bias in the efficiency measurement, albeit the ranking of hotels tends to be fairly consistent; the star rating is the primary source of efficiency bias followed by seasonality, while size has a minor impact.

Research limitations/implications

Future research could be directed to analyse the relevance of environmental heterogeneity in other areas; study the dynamics; investigate agglomeration effects; and use other methodological tools.

Practical implications

The analysis proposes new managerial interventions: targeted strategies to different groups; creation of networks of enterprises, clustered mainly in respect to size for highly rated enterprises and seasonality for low-rated enterprises; and incentives to annual hotels and raise in the product quality.

Originality/value

This paper simultaneously considers several environmental factors affecting heterogeneity in hotel production processes; investigates the effect of heterogeneity on either the efficiency scores or the ranking of hotels; and focuses on micro, low-quality or seasonal hotels.

Details

International Journal of Contemporary Hospitality Management, vol. 27 no. 5
Type: Research Article
ISSN: 0959-6119

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Article

Asif Khan and Saba Shireen

The study attempts to examine the bias-adjusted financial and operational efficiency estimates of microfinance institutions (MFIs) operating in the Eastern Europe and…

Abstract

Purpose

The study attempts to examine the bias-adjusted financial and operational efficiency estimates of microfinance institutions (MFIs) operating in the Eastern Europe and Central Asia (ECA) region during the financial year 2017–2018. In addition, the study also identifies the responsible factors determining the financial and operational performances of MFIs operating in the ECA region.

Design/methodology/approach

The study employs two-stage bootstrap data envelopment analysis (DEA). In the first stage, the authors incorporate the bootstrap procedure in the DEA framework as suggested by Simar and Wilson (2000) to estimate the bias-corrected efficiency scores of 67 sample MFIs. In order to identify the drivers of efficiency level, the study deploys the bootstrap truncated regression model following the Simar and Wilson (2007) guidelines in the second stage of analysis.

Findings

The authors note from the empirical results that MFIs operating in the ECA region are relatively more financially efficient (0.588) than socially efficient (0.496). However, none of the MFIs were found to be operating at best-practice frontier while considering the bias-adjusted efficiency estimates. Further, the results of second stage of analysis confirm that corporate governance, that is, board size has positive and statistically significant impact on MFIs’ performances. In addition, the bad credit quality deteriorates both financial revenue and operational efficiency. Moreover, the MFIs’ size, profit status and debt-to-equity ratio were also found to be statistically significant to determine the operational and financial efficiency of MFIs in the ECA region.

Practical implications

The study provides the robust efficiency estimates and factors responsible to determine the financial and operational efficiency of MFIs operating in the ECA region. Further, the empirical results of the study provide the inputs and further direction to the policymakers, regulators, practitioners and managers in framing the policy and optimal operating strategies for ECA MFIs industry.

Originality/value

The study extends the DEA analysis by incorporating the bootstrap procedure in DEA model to estimate the bias-adjusted efficiency scores which are more reliable and robust. In addition, bootstrap truncated regression has been applied to identify the drivers of efficiency. Moreover, in the literature there is no single study which has deployed the double bootstrap DEA framework to examine the financial and operational efficiency estimates and its drivers.

Details

Benchmarking: An International Journal, vol. 27 no. 9
Type: Research Article
ISSN: 1463-5771

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Article

Ines Ben Salah Mahdi and Mouna Boujelbène Abbes

The purpose of this paper is to conduct a behavioral analysis, through overconfidence, in order to understand how this cognitive bias could affect risk taking and…

Abstract

Purpose

The purpose of this paper is to conduct a behavioral analysis, through overconfidence, in order to understand how this cognitive bias could affect risk taking and inefficiency in Islamic and conventional banks operating in the MENA region.

Design/methodology/approach

To achieve the objective, the authors considered two overconfidence proxies, namely loan growth rate and net interest margin. Using the generalized method of moments method regressions for panel data, the authors found that the two overconfidence proxies have an effect on the risk exposure and consequently on the efficiency level of Islamic and conventional banks.

Findings

In general, overconfidence bias causes excessive risk taking and the degradation of the cost efficiency level. Moreover, these effects emerge with a delay of three to four years and have implications that are not too different for both types of banks.

Originality/value

The main motivation underlying this research study is the relatively new field of behavioral finance way in treating the topic of overconfidence. The particularity of the overconfidence bias topic is its assumption that financial decisions can be influenced by cognitive biases, ignoring the fact of a predetermined risk-return calculation.

Details

Managerial Finance, vol. 44 no. 6
Type: Research Article
ISSN: 0307-4358

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Book part

Andreas Kleine and Regina Schlindwein

DEA is a favored method to investigate the efficiency of institutions that provide educational services. We measure the efficiency of German universities especially from…

Abstract

DEA is a favored method to investigate the efficiency of institutions that provide educational services. We measure the efficiency of German universities especially from the students’ perspective. Since 1998, the Centrum für Hochschulentwicklung (CHE) evaluates German universities annually. The CHE ranking consists of three ranking groups for different indicators, but they do not create a hierarchy of the universities. Thus, a differentiation of the universities ranked in the same group is not possible. Based on the CHE data set, especially the surveys among students, we evaluate teaching performance from the students’ point of view using data envelopment analysis (DEA). DEA enables us to identify departments that – in the students’ perspective – are efficient in the sense that they provide high quality of education. As a method for performance evaluation, we apply a DEA bootstrap approach. By the use of this approach, we incorporate stochastic influences in the data and derive confidence intervals for the efficiency. Based on data generated by the bootstrap procedure, we are able to identify stochastic efficient departments. These universities serve as a benchmark to improve teaching performance.

Details

Financial Modeling Applications and Data Envelopment Applications
Type: Book
ISBN: 978-1-84855-878-6

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Article

Thanh Pham Thien Nguyen and Son Hong Nghiem

The purpose of this paper is to examine the operational efficiency and effects of market concentration and diversification on the efficiency of Chinese and Indian banks in…

Abstract

Purpose

The purpose of this paper is to examine the operational efficiency and effects of market concentration and diversification on the efficiency of Chinese and Indian banks in the 1997-2011 period.

Design/methodology/approach

This study employs the two-stage bootstrap procedure of Simar and Wilson (2007) to obtain valid inferences on the efficiency scores and the efficiency determinants.

Findings

Using data set for each country separately, the authors found that the bias-corrected cost efficiency displays an upward trend in Chinese and Indian banks. This trend is consistent with profit efficiency among Chinese banks, but the trend is unclear in Indian banks. Market concentration is negatively related to cost and profit efficiencies of Chinese banks. However, market concentration is positively associated with cost efficiency, but unrelated to profit efficiency of Indian banks. In Chinese banks, diversification of revenue, earning assets and non-lending earning assets are associated with increasing profit efficiency, but their effects to cost efficiency are not clear. In Indian banks, diversification of earning assets increases profit efficiency while there are cost efficiency losses from diversification of revenue and earning assets.

Practical implications

Bank regulators and supervisors in China should consider establishing policies to reduce market concentration and encourage diversification of revenue, earning assets and non-lending earning assets, while increasing concentration and diversification of earning assets should be encouraged in Indian banks.

Originality/value

To the best of the authors’ knowledge, this is the first study employing the double bootstrap procedure proposed by Simar and Wilson (2007) which can address the problem of the two-stage data envelopment analysis or SFA estimator in the efficiency literature on Chinese and Indian banks that efficiency scores obtained in the first stage are inter-dependent, and hence violating the basic assumption in regression analysis in the second stage.

Details

Managerial Finance, vol. 42 no. 10
Type: Research Article
ISSN: 0307-4358

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Article

Yong Joo Lee and Seong-Jong Joo

Data envelopment analysis (DEA) is based on the production possibility set that involves the process of converting resources or inputs to outputs. Accordingly, most DEA…

Abstract

Purpose

Data envelopment analysis (DEA) is based on the production possibility set that involves the process of converting resources or inputs to outputs. Accordingly, most DEA models include endogenous variables and need an additional step to find the influence of exogenous variables on the process. The purpose of this paper is to examine the relationship between the efficiency scores of DEA and the exogenous variables using truncated regression analysis with double bootstrapping along with two additional methods.

Design/methodology/approach

First, the authors employ DEA for benchmarking the comparative efficiency of the health care institutes. Next, the authors run and compare truncated, ordinary least square (OLS) and Tobit regression analysis using the double bootstrapping algorithm for finding the influence of exogenous variables on the efficiency of the health care institutes.

Findings

The authors confirmed the amount of bias for the Tobit and OLS regression models, which was caused by serially correlated errors. Accordingly, the authors chose results from the truncated regression model with double bootstrapping for examining the influence of exogenous or environment variables on the efficiency scores.

Research limitations/implications

The study includes cross-sectional data on health care institutes in the state of Washington, USA. Collecting data in various states or regions over time is left for future studies.

Practical implications

In this study, three exogenous variables such as Medicaid revenues, locations of health care institutes and ownership types are significant for explaining the relationship between the efficiency scores and a group of the exogenous variables. Managers and policy makers need to pay attention to these variables along with endogenous variables for promoting the sustainability of the health care institutes.

Originality/value

The study demonstrates the usefulness of the truncated regression analysis with double bootstrapping for confirming the relationship between the efficiency scores of DEA and a group of exogenous variables, which is rare in the DEA literature.

Details

Benchmarking: An International Journal, vol. 27 no. 1
Type: Research Article
ISSN: 1463-5771

Keywords

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Article

Linhui Wang, Jing Zhao, Jia Sun and Zhiqing Dong

The purpose of this paper is to examine the effect of biased technology on employment distribution and labor status in income distribution of China. It also testifies a…

Abstract

Purpose

The purpose of this paper is to examine the effect of biased technology on employment distribution and labor status in income distribution of China. It also testifies a threshold effect of the capital per labor and employment distribution on labor status from biased technology.

Design/methodology/approach

This paper presents a normalized supply-side system of three equations to measure the bias of technology in China. Linear and threshold regressions approaches are applied over cross-province panel data to investigate the influence which biased technology has on labor status under different capital per labor and employment distribution regimes.

Findings

This paper empirically shows that technology has been mostly capital-biased in China. The regression results indicate that capital-biased technology impairs labor income status and tend to modify employment distribution and labor income between industries. Furthermore, it reveals the threshold effect of capital per labor and employment distribution on the relationship between biased technology and labor status.

Originality/value

This paper extends the literature by explaining labor status from the perspective of biased technology and the effect of inter-industry employment distribution in China. It further explores the asymmetric effect of biased technology on labor productivity and income, which promotes inter-industry labor mobility and modifies employment distribution. This paper highlights the implications of this explanation for labor relations and human resource management.

Details

Chinese Management Studies, vol. 14 no. 1
Type: Research Article
ISSN: 1750-614X

Keywords

Content available
Article

Johan Magnusson, Tero Päivärinta and Dina Koutsikouri

The purpose of this study is to explore and theorize on balancing practices (BP) for digital ambidexterity in the public sector.

Abstract

Purpose

The purpose of this study is to explore and theorize on balancing practices (BP) for digital ambidexterity in the public sector.

Design/methodology/approach

The research is designed as an interpretative case study of a large Swedish authority, involving data collection in the form of interviews and internal documents. The method of analysis involves both theorizing on the findings from a previous framework for digital innovation and deriving design implications for ambidextrous governance.

Findings

The findings show that all identified BP except one (shadow innovation) is directed toward an increased emphasis on efficiency (exploitation) rather than innovation (exploration). With the increased demand for innovation capabilities in the public sector, this is identified as a problem.

Research limitations/implications

The limitations identified are related to the choice in the method of an interpretative case study, with issues of transferability and empirical generalizability as the main concerns. The implications for research are related to a need for additional studies into the enactment of digital ambidexterity, where the findings offer insight and inspiration for continued research.

Practical implications

The study shows that managers and executives involved in the design and imposition of governance within the public sector need to take the design recommendations for digital ambidexterity into consideration.

Social implications

The study offers two main implications for practice. First, policymakers need to take the conceptual distinction of efficiency and innovation into account when designing policies for the digital government. Second, existing funding practices need to be re-designed to better facilitate innovation.

Originality/value

This is the first study directed toward enhancing the insight into BP for digital ambidexterity in the public sector. The study has so far resulted in both a localized shift in policy and new directions for research. With the public sector facing needs for increased innovation capabilities, the study offers a first step toward understanding how this is currently counteracted through governance design.

Details

Transforming Government: People, Process and Policy, vol. 15 no. 1
Type: Research Article
ISSN: 1750-6166

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Article

Nicholas Pawsey, Jayanath Ananda and Zahirul Hoque

The purpose of this paper is to explore the sensitivity of economic efficiency rankings of water businesses to the choice of alternative physical and accounting capital…

Abstract

Purpose

The purpose of this paper is to explore the sensitivity of economic efficiency rankings of water businesses to the choice of alternative physical and accounting capital input measures.

Design/methodology/approach

Data envelopment analysis (DEA) was used to compute efficiency rankings for government-owned water businesses from the state of Victoria, Australia, over the period 2005/2006 through 2012/2013. Differences between DEA models when capital inputs were measured using either: statutory accounting values (historic cost and fair value), physical measures, or regulatory accounting values, were scrutinised.

Findings

Depending on the choice of capital input, significant variation in efficiency scores and the ranking of the top (worst) performing firms was observed.

Research limitations/implications

Future research may explore the generalisability of findings to a wider sample of water utilities globally. Future work can also consider the most reliable treatment of capital inputs in efficiency analysis.

Practical implications

Regulators should be cautious when using economic efficiency data in benchmarking exercises. A consistent approach to account for the capital stock is needed in the determination of price caps and designing incentives for poor performers.

Originality/value

DEA has been widely used to explore the role of ownership structure, firm size and regulation on water utility efficiency. This is the first study of its kind to explore the sensitivity of DEA to alternative physical and accounting capital input measures. This research also improves the conventional performance measurement in water utilities by using a bootstrap procedure to address the deterministic nature of the DEA approach.

Details

International Journal of Public Sector Management, vol. 31 no. 3
Type: Research Article
ISSN: 0951-3558

Keywords

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