COST OPTIMIZATION STRATEGY FOR EFFICIENCY IMPROVEMENT

The data envelopment analysis (DEA) evaluation technique computes the relative efficiencies of all decision-making units (DMUs) by finding a set of optimal weights for each DMU that can maximize its efficiency. This technique also provides inefficient DMUs directions for efficiency improvement. Howe...

Ausführliche Beschreibung

Gespeichert in:
Bibliographische Detailangaben
Veröffentlicht in:International journal of organizational innovation 2016-01, Vol.8 (3), p.308
Hauptverfasser: Bao, Chiao-Pin, Wei, Nai-Chien, Tsai, Meei-Ing
Format: Artikel
Sprache:eng
Schlagworte:
Online-Zugang:Volltext
Tags: Tag hinzufügen
Keine Tags, Fügen Sie den ersten Tag hinzu!
Beschreibung
Zusammenfassung:The data envelopment analysis (DEA) evaluation technique computes the relative efficiencies of all decision-making units (DMUs) by finding a set of optimal weights for each DMU that can maximize its efficiency. This technique also provides inefficient DMUs directions for efficiency improvement. However, DEA does not consider the cost required for efficiency improvement. In practice, the costs of reducing input and increasing output are different. Therefore, exploring how to integrate the improvement cost into the efficiency improvement plan is a valuable topic worth investigating. This study reveals that as long as the input items and set of weights for the output and input items remain the same, a DMU with output items Y' = (y^sub 1^/θ, y^sub 2^/θ,...,y^sub s^/&thgr) is an efficient frontier DMU. A new strategy for improving DMU efficiencies with minimal cost is proposed. Mathematical theorems are developed to demonstrate the feasibility of the proposed strategy. Finally, numerical examples are used to illustrate the proposed strategy and compare it with the DEA efficiency improvement plan. The results reveal that the proposed strategy for efficiency improvement is superior to that of the DEA-CCR model. Moreover, the study provides not only a theoretical explanation but also practical reasons for efficiency improvement.
ISSN:1943-1813