An interval efficiency analysis with dual‑role factors

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.Data envelopment analysis (DEA) is a data-driven and benchmarking tool for evaluating the relative efficiency of production units with multiple outputs and inputs. Conventional DEA models are based on a production system by converting inputs to outputs using input-transformation-output processes. However, in some situations, it is inescapable to think of some assessment factors, referred to as dual-role factors, which can play simultaneously input and output roles in DEA. The observed data are often assumed to be precise although it needs to consider uncertainty as an inherent part of most real-world applications. Dealing with imprecise data is a perpetual challenge in DEA that can be treated by presenting the interval data. This paper develops an imprecise DEA approach with dual-role factors based on revised production possibility sets. The resulting models are a pair of mixed binary linear programming problems that yield the possible relative efficiencies in the form of intervals. In addition, a procedure is presented to assign the optimal designation to a dual-role factor and specify whether the dual-role factor is a nondiscretionary input or output. Given the interval efficiencies, the production units are categorized into the efficient and inefficient sets. Beyond the dichotomized classification, a practical ranking approach is also adopted to achieve incremental discrimination through evaluation analysis. Finally, an application to third-party reverse logistics providers is studied to illustrate the efficacy and applicability of the proposed approach

Developing a supplier performance analysis model : case study: Aker MH supplier performance

Masteroppgave i økonomi og administrasjon - Universitetet i Agder 2012This master thesis focuses on the use Data Envelopment Analysis (DEA) for measuring supplier performance. Goal of the study is to apply a mathematical model for supplier performance measurement which would be able to handle multi-criteria. To test the model in practice, cooperation was established with case study firm (Aker Maritime Hydraulics), which is providing drilling engineering solutions to Oil & Gas industry. Proposing the model for measuring performance of existing suppliers not only demonstrates how DEA can be applied, but also sets the grounds for supplier performance improvement process in a case study firm. At the same time, this thesis makes a small contribution to academic literature on supplier performance measurement by introducing an application in new setting. To reach the goal of the study, the following Research Question is defined: How can Data Envelopment Analysis be used as tool for measuring supplier performance? After the early works related to supplier performance evaluation (Dickson (1966), Lambertson et al (1976)), this field received increasing attention. Mathematical model called Data Envelopment Analysis and developed by Charnes, Cooper and Rhodes (1978) was adopted as one of the tools for measuring supplier performance and resulted in multiple academic articles regarding different application settings and model extensions, e.g. Weber and Desai (1996), Narasimhan et al (2001), Talluri et al (2006), Zeydan et al (2011) etc. Applications of DEA covered various settings - first public, then private organizations. To the best of knowledge, DEA was not applied for supplier performance evaluation in Norwegian Oil & Gas industry related technology firm. In addition, this thesis presents an extended approach of measuring suppliers‘ relative performance by comparing perceived Ideal supplier and existing suppliers based on performance. In this thesis, suppliers‘ performance was measured in terms of efficiency in utilizing inputs (supplier‘s average price trend over 5 years) to produce outputs (quality, delivery precision, invoice matching to purchase order). Out of 19 suppliers analyzed, DEA identified 2 efficient suppliers. Ideal Supplier, when included in the model, was identified as efficient, together with the same two efficient units that were identified in first application. Findings revealed that three worst performing suppliers accounted for more than half of firm‘s total spending towards a supplier group, while best five accounted for only 12.4%. Criteria that both Aker MH used for supplier performance measurement and also this study used for DEA application (price, delivery, quality) is consistent with academic research 4 results on most important supplier evaluation criteria (Dickson, 1966) and most often used criteria for supplier evaluation in academic research (Weber et al 1991)

Grabbing the Air Force by the Tail: Applying Strategic Cost Analytics to Understand and Manage Indirect Cost Behavior

Recent and projected reductions in defense spending are forcing the military services to develop systematic approaches to identify cost reduction opportunities and better manage financial resources. In response, the Air Force along with her sister services are developing strategic approaches to reduce front-line mission resources, commonly referred to as the Tooth . However, an underemphasized contributing source of costs are mission support activities, commonly referred to as the Tail . With the tail historically representing a sizable portion of the annual Air Force budget, strategically managing cost behavior of these indirect activities has the opportunity to generate significant cost reductions. However, very little applied or academic research have focused on advancing the knowledge behind the economics of, or the analytic techniques applied to, these activities for cost management purposes. To address this concern, this dissertation investigates i) how organizations use analytic methodologies and data sources to understand and manage cost behavior, ii) how to identify underlying cost curves of concern across tail activities, iii) how to distinguish historical relationships between the tooth and tail, iv) how to improve the performance assessment of tail activities for improved resource allocation, and v) how to provide a decision support tool for tooth-to-tail policy impact analysis

Benchmarking and analysis of store performance in a retail group

An everyday need of retail firms operating in saturated markets, where they face fierce competition, is the accurate and unbiased analysis of store performance. The aim of this work is to analyse and benchmark store efficiency and propose targets for store performance improvement in a Portuguese Retail Group. Panel data for 27 stores in the period 2015 to 2017 has been used to allow the assessment of store efficiency and the setting of improvement goals for the inefficient units, while identifying adequate efficiency drivers. The methodologies and literature review allowed the identification of the techniques to be applied in the study: 1) Data Envelopment Analysis, to measure stores relative efficiency and to set improvement targets to the stores under analysis; 2) Tobit Regression Model, to identify the predominant factors leading to efficiency. Literature review and analysis of the available dataset enabled the selection of the variables to be used when applying each of the above techniques. The work undertaken led to a number of important conclusions, regarding different aspects of this real life multivariable problem: 1) identification of efficient and inefficient stores; 2) store efficiency distribution by geographical location; 3) evolution of store efficiency over the time; 4) definition of performance targets for the inefficient stores; 5) benchmark highest performing units against lowest performing units with different indicators and 6) identification and quantification of the environmental factors influencing store efficiency.As empresas de retalho que operam em mercados saturados, com uma concorrência feroz, têm a necessidade constante de fazer uma análise precisa e imparcial do desempenho das suas lojas. O objetivo deste trabalho é analisar e comparar a eficiência das lojas um grupo de retalho em Portugal propondo objetivos de melhoria de desempenho. Foram utilizados dados em painel para 27 lojas referentes ao período de 2015 a 2017, para avaliar a eficiência das lojas e estabelecer objetivos de melhoria para as unidades ineficientes, identificando também os fatores com maior impacto na eficiência. As metodologias e a revisão de literatura permitiram a identificação das técnicas a aplicar no estudo: 1) Data Envelopment Analysis, para medir a eficiência relativa e definir objetivos de melhoria para as lojas em análise; 2) Tobit Regression Model, para identificar os fatores predominantes que conduzem à eficiência. A revisão de literatura e a análise da amostra disponível suportaram a seleção das variáveis a serem utilizadas na aplicação de cada uma das técnicas. O trabalho realizado conduziu um conjunto de conclusões importantes, relativamente a diferentes aspetos deste problema real multivariável: 1) identificação das lojas eficientes e ineficientes; 2) distribuição da eficiência das lojas por localização geográfica; 3) evolução da eficiência das lojas ao longo do tempo; 4) definição de objetivos de desempenho para as lojas ineficientes; 5) Comparação das lojas de elevado e baixo desempenho relativamente a diferentes indicadores e 6) a identificação e quantificação das variáveis ambientais que afetam a eficiência

Multiregional sustainability at a sectoral level: Towards more effective environmental regulations

Aquesta tesi està dedicada al desenvolupament d'eines per ajudar als responsables polítics en la creació de normatives eficaces de manera eficient i metòdica. La tesi està organitzada en quatre seccions principals. A la secció 1, presentem la introducció, on establim les bases dels mètodes i dades utilitzades en aquest treball, així com els buits bibliogràfics que cobrim amb els nostres estudis. La secció 2 es basa en el primer treball, on estudiem l'eco-eficiència dels sectors manufacturers de la UE combinant taules MREEIO amb el mètode DEA i seguint aproximacions basades en la producció i el consum. Això permet identificar els sectors que requereixen regulacions en impactes específics. A continuació, a la secció 3, utilitzem DEA per determinar l'eficiència de sostenibilitat dels mixos elèctrics de la UE analitzant els trets socials, econòmics i ambientals de cadascun d’ells. En una segona etapa, utilitzem un model matemàtic a mida anomenat EffMixF per obtenir la nova composició elèctrica per als països que han resultat ineficients en la primera etapa. Aquests nous mixos es poden utilitzar com a full de ruta en l’elaboració de normatives específiques per al sector, indicant quines tecnologies s'han de fomentar, o bé obstaculitzar a cada país ineficient. Finalment, a la secció 4, determinem els factors clau de l'impacte ambiental a escala global. Per aconseguir-ho, primer comparem dues tècniques de descomposició, els mètodes SDA i Shapley-Sun, per tal d’establir les seves similituds i introduir una equació general simplificada que es pot utilitzar en substitució d’ambdós mètodes. Per acabar, apliquem aquests mètodes en un cas d’estudi, on considerem una selecció d’impactes ambientals en un període de 15 anys, per determinar la utilitat dels mètodes de descomposició. Les eines desenvolupades en aquesta tesis proporcionen informació valuosa respecte a les debilitats i oportunitats de millora dels sectors econòmics a nivell macroeconòmic.Esta tesis está dedicada al desarrollo de herramientas para ayudar a los responsables políticos en la creación de regulaciones efectivas de manera eficiente y metódica. La tesis contiene cuatro secciones principales. En la sección 1, presentamos la introducción, donde se establecen los métodos y datos utilizados en esta tesis, así como las lagunas bibliográficas que cubrimos con nuestros estudios. La sección 2 se basa en el primer trabajo, donde estudiamos la ecoeficiencia de los sectores manufactureros de la UE mediante la combinación de las tablas MREEIO con el método DEA y siguiendo enfoques basados en la producción y el consumo. Esto nos permite identificar los sectores que requieren regulaciones en impactos específicos. A continuación, en la sección 3 usamos DEA para determinar la eficiencia de sostenibilidad de los mixes eléctricos de la UE analizando las características sociales, económicas y medioambientales de cada uno de ellos. En una segunda etapa, utilizamos un modelo matemático a medida llamado EffMixF para obtener nuevos mixes eléctricos para los países ineficientes. Estos nuevos mixes pueden ser utilizados como plan estrategico en la elaboración de reglamentos específicos para el sector, indicando qué tecnologías deben ser fomentadas, o bien obstaculizadas, en cada país ineficiente. Finalmente, en la sección 4, determinamos los factores clave del impacto ambiental a escala global. Para conseguirlo, primero comparamos dos técnicas de descomposición, SDA y Shapley-Sun, para establecer sus similitudes e introducir una ecuación general simplificada como sustitución de ambos métodos. Posteriormente, aplicamos estos métodos en un caso de estudio donde consideramos una selección de impactos ambientales en un período de 15 años para determinar la utilidad de los métodos de descomposición. Las herramientas desarrolladas en esta tesis proporcionan información valiosa respecto a las debilidades y oportunidades de los sectores económicos a nivel macroeconómico.This thesis is dedicated to the development of tools to assist policy makers in the creation of effective regulations in an efficient and methodical way. The thesis is organized into four main sections. In section 1, we present the introduction, where we establish the background of the methods and data used in this work, as well as the literature gaps that we cover with our studies. Section 2 is based on the first work, where we study the eco-efficiency of the EU manufacturing sectors by combining MREEIO tables with the DEA method, following the production and consumption-based approaches. This allows us to identify the sectors requiring regulations in specific burdens. Then, in section 3, we use DEA to determine the sustainability efficiency of the EU electricity mixes by analyzing the social, economic and environmental features of each portfolio. In a second stage, we use a tailored mathematical model named EffMixF to obtain new electricity mixes for the countries found inefficient in the previous step. These new mixes can be used as roadmap to devise specific regulations for the sector, indicating which technologies should be boosted and which hindered in each inefficient country. Finally, in section 4, we determine the key driving factors of the environmental impact on a global scale. For this, we first compare two decomposition techniques, the SDA and the Shapley-Sun methods, establishing their similarities and introducing a simplified general equation that can be used in substitution of both methods. Then, we apply these methods in a case study, where we consider a selection of environmental impacts in a 15-year period, to determine the usefulness of the decomposition methods. The tools developed in this thesis provide valuable insight regarding the weaknesses and improvement opportunities of the economic sectors in a macroeconomic scale

Energy use and related emissions of the UK residential sector: quantitative modelling and policy implications

Reducing energy demand and carbon emissions from the UK housing stock through efficiency improvements is the focus of policy interest. The 2008 UK Climate Change Act set legally binding targets of an 80% reduction in greenhouse gas emissions against a 1990 baseline. The majority of emissions in the residential sector are carbon dioxide emissions arising from energy used for heating homes and water, cooking, lighting and electrical appliances. The sector s contribution to total UK emissions is significant and therefore reducing energy use in homes is an important factor if the UK is to meet its targets. In this research an initial survey of studies of the residential sector has been conducted to review factors considered to influence energy use and related emissions in UK housing. Further review identified energy and climate change policy instruments and structural change in the energy supply sector between 1970 and the present. A subsequent time-line of policy and events describes the changing, historical policy landscape related to energy efficiency improvements in the sector. As a result of these reviews, a need to better understand how householders have responded to technical energy efficiency improvements in housing, and the influence of social and economic factors, was identified as a research gap. In order to model householders historical behaviour Data Envelopment Analysis (DEA) was identified as an innovative approach for this field of research as a potential means to measure sector efficiency in a new way. The analysis has two stages. In the first, DEA is used to measure the relative efficiency with which the UK housing sector has managed its energy use and related emissions to deliver energy services such as space heating and lighting to householders. In the second stage, multiple regressions are used to examine whether the variability over time in the efficiency measure can be explained by policy interventions, energy market developments, and economic and social factors. DEA is a method for modelling the relative performance efficiency with which an observed sample converts measurable inputs to quantitative outputs. In this research, samples consist of annual observations of the UK housing stock, using data largely taken from DECC s UK housing energy fact file. An efficiency frontier of performance enveloping the observed sample points as closely as possible is constructed through DEA mathematical programming. The core of the analysis lies in identifying relevant quantitative input and output measures from available data. A range of measures of comfort and energy service levels to represent energy service outputs, and household energy and emissions data to represent inputs are examined in the analysis. The result is a timeline of efficiency performance that can be related to socio-economic change and the history of policy interventions. The analysis shows that the efficiency of the UK housing stock to manage its energy use and related emissions has not followed the steady upward trend that might have been expected from technical innovation. There is evidence of rebound effects over time, with householders behaviour in response to technical efficiency improvements acting to raise comfort levels rather than lower energy usage. Nevertheless, statistically significant roles can be identified for factors such as income, price and tenure which have implications for policy design and control and lead to a number of policy recommendations

A nonparametric approach to productive efficiency measurement : an application of bootstrap DEA to gold mining

In this dissertation the technical efficiency in gold mining is investigated. To the best available knowledge, this is the first such study on gold mining, whether on a localised (one country) or for a cross-section of countries. Since the work by Farrell (1957), much work has been done using nonparametric methods such as DEA. Although extensions in DEA technique, such as bootstrapping have been available for some time, their use has been limited in comparison with the number of overall DEA studies carried out. In this dissertation both DEA and bootstrap DEA are applied to two gold mining cross sectional samples, one on Zimbabwe consisting of thirty-four mines, and the an international one which also included some Zimbabwean mines which comprise fifty-nine observations.The main reason for carrying out the study is an interest in gold mining in general and its importance to Zimbabwe in particular. As will be noted in Chapter 2, the economic development of Zimbabwe has been linked, to a varying extent over the ages, to its growth of the gold mining sector.The results of the dissertation provide some useful insights into the relative performances of gold mines and also some characteristics of the Zimbabwean gold mining sector. The main results indicate that gold mining is characterised mainly by technical efficiency dominating scale efficiency. This is particular relevant when the Zimbabwean mines are compared with their international counterparts. Zimbabwean mines are found to be relatively technically efficient but less so when overall efficiency is considered. In fact they have the lowest overall efficiency scores in the international sample. The results also indicate that mines from the so-called developed mining economies, Australia, Canada, the US and South Africa are the benchmarks in terms of optimal operations. It is mines from these countries which define the overall efficiency frontier.The results of both the samples highlight potential shortcomings in applying DEA and bootstrap extension to gold mining, both for single country and for cross-country cases. Additionally, there are possibilities, with adequate data, of relating country-specific characteristics to differences in overall efficiency among countries.Finally there are indications that including mineralogical factors such as the recovery rate in the production technology has an effect on technical efficiency. Mines with low recovery rates tend to exhibit comparatively higher technical efficiency. The study does have some limitations, mainly because of lack of data. In particular, there were problems in coming with attributing the contribution of capital services to efficiency with the result that a different measure for the flow of capital services is used for each sample. In addition, the two samples are for different time periods. This limits comparative analysis

Essays on the measurement of school efficiency

Measuring school efficiency is a challenging task. First, a performance measurement technique has to be selected. Within Data Envelopment Analysis (DEA), one such technique, alternative models have been developed in order to deal with environmental variables. The majority of these models lead to diverging results. Second, the choice of input and output variables to be included in the efficiency analysis is often dictated by data availability. The choice of the variables remains an issue even when data is available. As a result, the choice of technique, model and variables is probably, and ultimately, a political judgement. Multi-criteria decision analysis methods can help the decision makers to select the most suitable model. The number of selection criteria should remain parsimonious and not be oriented towards the results of the models in order to avoid opportunistic behaviour. The selection criteria should also be backed by the literature or by an expert group. Once the most suitable model is identified, the principle of permanence of methods should be applied in order to avoid a change of practices over time. Within DEA, the two-stage model developed by Ray (1991) is the most convincing model which allows for an environmental adjustment. In this model, an efficiency analysis is conducted with DEA followed by an econometric analysis to explain the efficiency scores. An environmental variable of particular interest, tested in this thesis, consists of the fact that operations are held, for certain schools, on multiple sites. Results show that the fact of being located on more than one site has a negative influence on efficiency. A likely way to solve this negative influence would consist of improving the use of ICT in school management and teaching. Planning new schools should also consider the advantages of being located on a unique site, which allows reaching a critical size in terms of pupils and teachers. The fact that underprivileged pupils perform worse than privileged pupils has been public knowledge since Coleman et al. (1966). As a result, underprivileged pupils have a negative influence on school efficiency. This is confirmed by this thesis for the first time in Switzerland. Several countries have developed priority education policies in order to compensate for the negative impact of disadvantaged socioeconomic status on school performance. These policies have failed. As a result, other actions need to be taken. In order to define these actions, one has to identify the social-class differences which explain why disadvantaged children underperform. Childrearing and literary practices, health characteristics, housing stability and economic security influence pupil achievement. Rather than allocating more resources to schools, policymakers should therefore focus on related social policies. For instance, they could define pre-school, family, health, housing and benefits policies in order to improve the conditions for disadvantaged children