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Article
Publication date: 12 September 2023

Javad Gerami, Mohammad Reza Mozaffari, Peter Wanke and Yong Tan

This study aims to present the cost and revenue efficiency evaluation models in data envelopment analysis in the presence of fuzzy inputs, outputs and their prices that the prices…

Abstract

Purpose

This study aims to present the cost and revenue efficiency evaluation models in data envelopment analysis in the presence of fuzzy inputs, outputs and their prices that the prices are also fuzzy. This study applies the proposed approach in the energy sector of the oil industry.

Design/methodology/approach

This study proposes a value-based technology according to fuzzy input-cost and revenue-output data, and based on this technology, the authors propose an approach to calculate fuzzy cost and revenue efficiency based on a directional distance function approach. These papers incorporated a decision-maker’s (DM) a priori knowledge into the fuzzy cost (revenue) efficiency analysis.

Findings

This study shows that the proposed approach obtains the components of fuzzy numbers corresponding to fuzzy cost efficiency scores in the interval [0, 1] corresponding to each of the decision-making units (DMUs). The models presented in this paper satisfies the most important properties: translation invariance, translation invariance, handle with negative data. The proposed approach obtains the fuzzy efficient targets corresponding to each DMU.

Originality/value

In the proposed approach, by selecting the appropriate direction vector in the model, we can incorporate preference information of the DM in the process of evaluating fuzzy cost or revenue efficiency and this shows the efficiency of the method and the advantages of the proposed model in a fully fuzzy environment.

Details

Journal of Modelling in Management, vol. 19 no. 1
Type: Research Article
ISSN: 1746-5664

Keywords

Article
Publication date: 13 February 2009

Anastasia Koutsomanoli‐Filippaki, Dimitris Margaritis and Christos Staikouras

The aim of this study is to investigate profit efficiency in the banking industries of 11 Central and Eastern European (CEE) countries for the period 1998‐2005.

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Abstract

Purpose

The aim of this study is to investigate profit efficiency in the banking industries of 11 Central and Eastern European (CEE) countries for the period 1998‐2005.

Design/methodology/approach

The authors employ a directional technology distance function approach to measure profit efficiency and decompose it into its technical and allocative components. They use these efficiency measures to investigate potential differences in banking performance across countries and across banks of different size and with different ownership status.

Findings

The results indicate that the highest proportion of profit inefficiency in the CEE region is attributed to allocative inefficiency, recognizing that considerable variation and different patterns in inefficiency levels across banking systems can be observed. Small and domestic private banks appear to be the most efficient. A negative relationship between efficiency and bank size, the capitalization ratio and market concentration, and a positive relationship with the European Bank for Reconstruction and Development index of banking reform are also found.

Research limitations/implications

Bank performance relative to best practice is measured across the CEE region. While it is found that on average technical inefficiency is relatively small and about one quarter of the banks lie on the technological frontier, the size of technical inefficiencies is likely to be exacerbated if the sample were to include Western European banks.

Practical implications

The effects of banking reforms are evident by recent positive trends in profit and allocative efficiencies estimated for CEE banking sectors. These trends suggest that policy makers should intensify efforts to further improve the financial services regulatory and supervisory framework while freeing any remaining explicit or implicit barriers to bank competition.

Originality/value

The study departs from the traditional literature of efficiency. It uses a directional distance function approach to model multi input – multi output banking technology and to investigate profit efficiency in CEE countries.

Details

Managerial Finance, vol. 35 no. 3
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 17 July 2017

Xiancun Hu and Chunlu Liu

The purpose of this paper is to present an approach for productivity measurement that considers both construction growth and carbon reduction.

Abstract

Purpose

The purpose of this paper is to present an approach for productivity measurement that considers both construction growth and carbon reduction.

Design/methodology/approach

The approach applied is a sequential Malmquist-Luenberger productivity analysis based on a directional distance function and sequential benchmark technology using the data envelopment analysis (DEA) technique. The sequential Malmquist-Luenberger productivity change index is decomposed into pure technical efficiency, scale efficiency, and technological change indices, in order to investigate the driving forces for productivity change.

Findings

The construction industries of the Australian states and territories were selected implement the new approach. The results indicate that construction growth and carbon reduction can be achieved simultaneously through the learning of techniques from benchmarks.

Practical implications

Current research on total factor productivity (TFP) in construction generally neglects carbon emissions. This does not accurately depict the nature of construction and therefore yields biased estimation results. TFP measurement should consider carbon reduction, which is beneficial for policymakers to promote sustainable productivity development in the construction industry.

Originality/value

The approach developed here is generic and enhances productivity and DEA research levels in construction. This research can be used to formulate policies for evaluating performance in worldwide construction projects, organizations and industries by considering undesirable outputs and desirable outputs simultaneously, and for promoting sustainable development in construction by identifying competitiveness factors.

Details

Engineering, Construction and Architectural Management, vol. 24 no. 4
Type: Research Article
ISSN: 0969-9988

Keywords

Open Access
Article
Publication date: 2 December 2016

Juan Aparicio

The purpose of this paper is to provide an outline of the major contributions in the literature on the determination of the least distance in data envelopment analysis (DEA). The…

2161

Abstract

Purpose

The purpose of this paper is to provide an outline of the major contributions in the literature on the determination of the least distance in data envelopment analysis (DEA). The focus herein is primarily on methodological developments. Specifically, attention is mainly paid to modeling aspects, computational features, the satisfaction of properties and duality. Finally, some promising avenues of future research on this topic are stated.

Design/methodology/approach

DEA is a methodology based on mathematical programming for the assessment of relative efficiency of a set of decision-making units (DMUs) that use several inputs to produce several outputs. DEA is classified in the literature as a non-parametric method because it does not assume a particular functional form for the underlying production function and presents, in this sense, some outstanding properties: the efficiency of firms may be evaluated independently on the market prices of the inputs used and outputs produced; it may be easily used with multiple inputs and outputs; a single score of efficiency for each assessed organization is obtained; this technique ranks organizations based on relative efficiency; and finally, it yields benchmarking information. DEA models provide both benchmarking information and efficiency scores for each of the evaluated units when it is applied to a dataset of observations and variables (inputs and outputs). Without a doubt, this benchmarking information gives DEA a distinct advantage over other efficiency methodologies, such as stochastic frontier analysis (SFA). Technical inefficiency is typically measured in DEA as the distance between the observed unit and a “benchmarking” target on the estimated piece-wise linear efficient frontier. The choice of this target is critical for assessing the potential performance of each DMU in the sample, as well as for providing information on how to increase its performance. However, traditional DEA models yield targets that are determined by the “furthest” efficient projection to the evaluated DMU. The projected point on the efficient frontier obtained as such may not be a representative projection for the judged unit, and consequently, some authors in the literature have suggested determining closest targets instead. The general argument behind this idea is that closer targets suggest directions of enhancement for the inputs and outputs of the inefficient units that may lead them to the efficiency with less effort. Indeed, authors like Aparicio et al. (2007) have shown, in an application on airlines, that it is possible to find substantial differences between the targets provided by applying the criterion used by the traditional DEA models, and those obtained when the criterion of closeness is utilized for determining projection points on the efficient frontier. The determination of closest targets is connected to the calculation of the least distance from the evaluated unit to the efficient frontier of the reference technology. In fact, the former is usually computed through solving mathematical programming models associated with minimizing some type of distance (e.g. Euclidean). In this particular respect, the main contribution in the literature is the paper by Briec (1998) on Hölder distance functions, where formally technical inefficiency to the “weakly” efficient frontier is defined through mathematical distances.

Findings

All the interesting features of the determination of closest targets from a benchmarking point of view have generated, in recent times, the increasing interest of researchers in the calculation of the least distance to evaluate technical inefficiency (Aparicio et al., 2014a). So, in this paper, we present a general classification of published contributions, mainly from a methodological perspective, and additionally, we indicate avenues for further research on this topic. The approaches that we cite in this paper differ in the way that the idea of similarity is made operative. Similarity is, in this sense, implemented as the closeness between the values of the inputs and/or outputs of the assessed units and those of the obtained projections on the frontier of the reference production possibility set. Similarity may be measured through multiple distances and efficiency measures. In turn, the aim is to globally minimize DEA model slacks to determine the closest efficient targets. However, as we will show later in the text, minimizing a mathematical distance in DEA is not an easy task, as it is equivalent to minimizing the distance to the complement of a polyhedral set, which is not a convex set. This complexity will justify the existence of different alternatives for solving these types of models.

Originality/value

As we are aware, this is the first survey in this topic.

Details

Journal of Centrum Cathedra, vol. 9 no. 2
Type: Research Article
ISSN: 1851-6599

Keywords

Article
Publication date: 1 January 2004

Mary Margaret Weber and William L. Weber

Develops and estimates efficiency and productivity measures in the US trucking and warehousing industry in the 48 contiguous states during the years 1994‐2000. The model…

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Abstract

Develops and estimates efficiency and productivity measures in the US trucking and warehousing industry in the 48 contiguous states during the years 1994‐2000. The model, estimated via data envelopment analysis, accounts for both desirable outputs and undesirable outputs produced by a given vector of inputs. The model establishes an efficient frontier of operation for each year studied and can be used to determine, on an annual basis, which of the 48 states operate on the frontier. The findings indicate that the trucking and warehousing industry does not operate efficiently in all 48 states during the period studied. If the industry were to operate on the frontier of the feasible output set by using inputs to produce outputs efficiently, it could eliminate three to four fatal traffic accidents per state per year, while simultaneously increasing industry income by between $38 to $47 million per state per year. In addition, finds that traditional techniques of estimating efficiency that ignore traffic fatalities bias estimates of efficiency and total factor productivity growth.

Details

International Journal of Physical Distribution & Logistics Management, vol. 34 no. 1
Type: Research Article
ISSN: 0960-0035

Keywords

Article
Publication date: 22 October 2020

Yongseung Han, Thomas Littlefield and Myeong Hwan Kim

This paper proposes the use of a gauge function as a measure of technical efficiency. The measure of technical inefficiency from a gauge function is desirable as the estimation of…

Abstract

Purpose

This paper proposes the use of a gauge function as a measure of technical efficiency. The measure of technical inefficiency from a gauge function is desirable as the estimation of a gauge function is not subject to the endogeneity problem under the behavioral assumption of profit maximization in the competitive market.

Design/methodology/approach

The authors address three important properties of a gauge function, i.e. linear homogeneity, monotonicity and convexity in inputs and outputs, and show how such properties are utilized in its estimation. Then, the authors apply the estimation of a gauge function to US Blacksmiths in 1850 and 1880 to show that a failure to satisfy such properties may lead to an incorrect inference on the technical efficiency.

Findings

The authors find that the Blacksmiths in the 1850s were technically more efficient than the ones in the 1880s, indicating technical regress in Blacksmithing when the properties are satisfied.

Originality/value

This paper introduces a measure of technical inefficiency from a gauge function and shows how to estimate the gauge function parametrically for the measure. The authors show McFadden's gauge function and its properties, which differ from the properties of other distance functions. The authors emphasize linear homogeneity as well as monotonicity and convexity in inputs and outputs, which must be satisfied in the estimation of a gauge function.

Details

Journal of Economic Studies, vol. 48 no. 6
Type: Research Article
ISSN: 0144-3585

Keywords

Open Access
Article
Publication date: 31 August 2012

Ming-Miin Yu, Bo Hsiao, Shih-Hsun Hsu and Shaw Yu Li

This paper presents an alternative approach to evaluating the overall efficiency and performance of Taiwanese container ports. Specifically, a parallel activity with series…

Abstract

This paper presents an alternative approach to evaluating the overall efficiency and performance of Taiwanese container ports. Specifically, a parallel activity with series structure concept in the form of data envelopment analysis (MNDEA) is used to construct a model that applies to three different activities: harbor management, stevedoring and warehousing operations. We will further divide each activity into two process types, production processes and services processes. We will also adopt a Delphi survey approach and use the Analytic Network Process (ANP) to identify these processes’influence dependence and their degree of importance for the MNDEA model setting. An empirical application demonstrates the performance of Taiwanese container ports by using MNDEA with window analysis techniques via the directional distance functionThe results demonstrate that the application is effective in indicating and/or suggesting resource-adjustments, while considering which undesirable output levels and shared inputs were involved. The results also present directions for possible improvements in workplace efficiency.

Article
Publication date: 3 November 2020

Sai Mohini M and Lavanya Vilvanathan

The study aims to focus on data envelopment analysis for assessing the microfinance institutions (MFIs) efficiency over the footings of its undesirable output, i.e. non-performing…

Abstract

Purpose

The study aims to focus on data envelopment analysis for assessing the microfinance institutions (MFIs) efficiency over the footings of its undesirable output, i.e. non-performing loans (NPLs). The attention is not only to evaluate the efficiency but also to identify the variable wise inefficiencies incorporating the quality of the portfolio.

Design/methodology/approach

The paper assessed MFI efficiency using three different methods of treatment of undesirable output to portray the significant difference. It also has used an advanced methodological model, i.e. weighted Russell directional distance model (WRDDM), under the non-radial assumption that allowed us to find the variable-wise inefficiency contribution. The study also investigated the efficiency differences concerning ownership, including all sizes of MFIs.

Findings

The study findings evidence the fall in efficiency score as NPL integrated, and it is found to be statistically significant. In the context of inefficiency assessment, among all input and output variables, total employees and operating expenses, portfolio quality inefficiencies are the leading causes of MFI inefficiencies. Undesirable output inefficiency accounts for almost one-third part of the total inefficiencies and remaining due to input inefficiencies. It is significant to draw attention that there is no improvement in undesirable output inefficiency. By contrast, input inefficiencies retained gains for two years and gradually showed a decreasing trend throughout 2015–2017.

Research limitations/implications

The authors have used balanced panel data of 72 Indian MFIs for five years' period from 2013–2017 whose complete data were available in the Microfinance Information Exchange.

Practical implications

The paper has focused on identifying the inefficiencies that are needed to be focused on to attain efficiency. It could provide vital information to the managers, policymakers in identifying the causes of inefficiencies, which is crucial to improve for long-term sustainability. It will be a roadmap for benchmarking, strategy building and policy-making processes.

Social implications

The findings of the study help in finding the benchmarking information for the inefficient decision-making units to identify the target units that need particular attention to focus. These practices could give a positive outcome, not only for institutions but also for the MFI clients.

Originality/value

The study provides an insight in to variable-wise inefficiency measurement using advanced model WRDDM in Indian context MFIs.

Details

Benchmarking: An International Journal, vol. 28 no. 3
Type: Research Article
ISSN: 1463-5771

Keywords

Article
Publication date: 13 August 2018

Yan Li and Min Zhang

Due to stringent regulations on carbon emissions, green manufacturing has become a critical issue in manufacturers’ strategic planning. Manufacturers are greening production…

Abstract

Purpose

Due to stringent regulations on carbon emissions, green manufacturing has become a critical issue in manufacturers’ strategic planning. Manufacturers are greening production through carbon abatement activities. The purpose of this paper is to investigate the factors that influence the effects of carbon abatement on environmental productivity growth.

Design/methodology/approach

Using data envelopment analysis with directional distance function, this study examines productivity growth associated with carbon abatement under regulated and unregulated production technologies. A pollution abatement index (PAI) is constructed for determining the effects of carbon abatement on environmental productivity growth. Panel data of 18 European countries in paper and pulp and coke sectors are collected for the analysis.

Findings

The empirical findings reveal that carbon abatement may positively or negatively affect environmental productivity growth which is dependent on the nature of technology in a sector, the innovation capabilities of a country and environmental regulations.

Originality/value

Conventional approaches in measuring productivity changes do not normally take undesired outputs (e.g. carbon emissions) into consideration. This study contributes to literature by constructing a PAI that considers productivity changes under a joint production technology (where both desired and undesired outputs are considered). The findings enhance current understandings on the effectiveness of carbon abatement activities and help managers establish corporate environmental strategies to adopt green manufacturing.

Details

Industrial Management & Data Systems, vol. 118 no. 6
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 25 January 2013

Po‐Chi Chen, Shih‐Hsun Hsu, Ching‐Cheng Chang and Ming‐Miin Yu

The paper aims to propose a modified multi‐activity data envelopment analysis (MDEA) to provide information on the efficiency performance of farmers' cooperatives with inputs…

Abstract

Purpose

The paper aims to propose a modified multi‐activity data envelopment analysis (MDEA) to provide information on the efficiency performance of farmers' cooperatives with inputs shared among several closely‐related activities.

Design/methodology/approach

The directional distance functions are used to construct a non‐radial measure of performance in which the optimal input/output adjustment and the optimal allocation of shared inputs is simultaneously taken into consideration. The model is applied to study the case of 201 farmers' cooperatives in Taiwan.

Findings

The empirical results suggest that there exist significant discrepancy in terms of the performance among the four departments of the farmers' cooperatives. Furthermore, the wide discrepancy in the returns to scale warrant further deregulations by easing restrictions on their consolidation with other cooperatives to operate over broader geographical areas.

Originality/value

An empirical study on Taiwan's farmers' cooperatives is used to demonstrate its applicability and how they can effectively allocate their fixed resources in a multi‐activity environment. Such a measure can be used for rewarding the individual groups of an organization based on their relative contributions to the overall performance.

Details

China Agricultural Economic Review, vol. 5 no. 1
Type: Research Article
ISSN: 1756-137X

Keywords

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