A Review of DEA-based Resource and Cost Allocation models: Implications for services

Data envelopment analysis (DEA), by its design, was not intended for resource allocation but for measuring relative efficiency of decision-making units. Despite this, many researchers have successfully applied this modelling technique to a variety of resource and cost allocation decisions in order to improve operational efficiencies. This paper is a comprehensive review and classification of such articles. The papers were classified by industry and by DEA model-orientation. The findings of this paper show that existing models predominately apply DEA to mass service industries (e.g., banking), thus, revealing the opportunity for researchers to further develop DEA-based resource allocation modelling toward improving the operational efficiencies of other service industries (e.g., professional services). To guide researchers to this end, we offer a discussion of the use of DEA modelling when the service provider and the customer are both resources needing to be allocated, in other words, using DEA to model professional or co-created services

Determining the Optimal Carbon Tax Rate based on Data Envelopment Analysis

Carbon tax policy is widely used to control greenhouse gases and how to determine a suitable carbon tax rate is very important for policy makers considering the trade-off between environmental protection and economic development. In an industry regulated by carbon tax policy, we consider two competing firms who sell ordinary products and green products respectively. In order to promote the firm who sells ordinary product to reduce carbon emissions, the government of China imposes carbon tax on the ordinary products. For the government, three objectives are considered when it makes carbon tax policy. They are increasing the government revenue, reducing the government expenditure and decreasing the carbon emissions. For the firms, it is important to explore their pricing strategies taken into account of the government tax policy. To find an optimal carbon tax rate and to achieve the three objectives simultaneously, we consider this as a multiple criteria decision-making problem. Hence, we propose to use a centralized data envelopment analysis (DEA) approach to solve it. We find that when one firm produces ordinary products and the other produces green products, the government may set a high tax rate. While when both firms sell ordinary products, the optimal tax policy for each firm is different and the government may impose a higher tax rate for one firm and a lower tax rate for the other firm

Evaluación y rediseño de la red pública educativa. Un análisis centralizado

La eficiencia escolar constituye un tema de interés. El número de publicaciones en este campo de investigación se ha incrementado en los últimos años, al intentar explicar qué características del centro y del entorno influyen en los resultados de los alumnos. A la luz de la Post-New Public Management, el objetivo del trabajo es la evaluación y rediseño, a través de técnicas frontera, de una muestra de centros de la red educativa pública de Catalunya. Los resultados obtenidos indican que sería posible mejorar la red y redistribuir de forma óptima los recursos educativos. También se aporta información útil para la toma de decisiones y la puesta en marcha de programas de mejora en los centros docentes

Cost Constrained Industry Inefficiency

In this paper a definition of industry inefficiency in cost constrained production environments is introduced. This definition uses the indirect directional distance function and quantifies the inefficiency of the industry in terms of the overall output loss, given the industry cost budget. The industry inefficiency indicator is then decomposed into sources components: reallocation inefficiency arising from sub-optimal configuration of the industry; firm inefficiency arising from a failure to select optimal input quantities (given the prevalent inputs prices); firm inefficiency due to lack of best practices. The method is illustrated using data on Ontario electricity distributors. These data show that lack of best practices is only a minor component of the overall inefficiency of the industry (less than 10 percent), with reallocation inefficiency accounting for more than 75 percent of the overall inefficiency of the system. An analysis based on counter-factual input prices is conducted in order to illustrate how the model can be used to estimate the effects of a change in the regulation regime

Evaluación y rediseño de la red pública educativa : un análisis centralizado

El análisis de eficiencia de los centros escolares constituye un tema de interés actual.El número de publicaciones en este campo de investigación se ha incrementado en lo últimos años, al intentar explicar que ciertas características del centro y del entorno influyen en los resultados de los alumnos. A la luz de la Teoría de la Producción y la Post-New Public Management, el objetivo del trabajo es la evaluación y rediseño, a través de técnicas frontera, de una muestra de centros de la red educativa pública de Catalunya. Los resultados obtenidos determinarán las acciones necesarias que permitan optimizar la red y redistribuir de forma óptima los recursos educativos. Por otro lado, aportarán información útil que ayude a la toma de decisiones por parte de las Administraciones Públicas y a la puesta en marcha de programas de mejora en los centros docentes

Centralised resource allocation using Lexicographic Goal Programming. Application to the Spanish public university system

Identificador de proyecto: FEDER-UPO UPO-1380624This paper deals with Data Envelopment Analysis (DEA) in centralised settings in which the operating units belong to the same organisation. In such a scenario, a global system-wide perspective may be adopted as regards resource allocation and target setting. In this paper, a new Lexicographic Goal Programming (lexGP) approach is proposed using three priority levels: the aggregated input consumption and output production goals; the input and output goals of the individual operating units; and the technical efficiency of the computed targets. It is assumed that the goals for the overall organisation are established by the Central Decision-Maker (CDM) and that they are consistent with those of the individual operating units. The proposed approach has been applied to the Spanish public university system, comprising 47 institutions. Given the CDM preferences in terms of input and output aggregate goals and relative importance weights, specific technical efficient targets have been computed for each university. The results show that the proposed approach is more suitable than the non-centralised DEA approach and produces targets that are more effective than other centralised resource allocation approaches in the sense that they are much closer to both the aggregate goals of the CDM and the specific goals of each university.Universidad de Sevill

Essays on the Missing Middle

The missing middle refers to the empirical fact that most employment in developing countries is located in either small-sized or large-sized firms. In this thesis,we investigated the missing middle phenomenon in a developing country, Vietnam. The first chapter consists of an introduction. The second chapter provides an overall picture of related literature. The third chapter focuses on the development of a theoretical model designed to capture the effect of corruption on the missing-middle formulation. The fourth chapter provides empirical evidence on the existence of a distinct distribution of firm size in Vietnam and some insights into the underlying mechanism of the phenomenon, focusing on corruption and productivity. The fifth chapter focuses on the industry efficiency score. In general, the fourth chapter is empirically oriented, whereas the third and fifth chapters are theoretically oriented. In particular, in the third chapter, we develop a theoretical model to capture an effect of corruption in the development of firms. The model incorporates the increasing costs of large-sized firms, compared to smaller ones. This model shows the firm size distribution (FSD) normally observed in developing economies along a continuum of infinitesimal firms in the market. In the fourth chapter, we discuss the empirical relationship between firm size and production efficiency, inefficiencies associated with scale, and the relationship between firm size and the likelihood of paying bribes, using firm level data from Vietnam. Our analysis indicates that middle-sized firms production efficiencies tend to be lower than the efficiencies in small-sized or large-sized firms in most manufacturing industries. In addition, the least-efficient firm size differs across sectors, indicating the necessity of sector-by-sector analyses to study the underlying mechanisms of the missing-middle phenomenon. Moreover, our results show that as firm size increases, the likelihood of paying bribes also increases. This finding, together with our productivity analysis showing that small sized firms produce more efficiently compared to middle- or large-sized firms, indicates that corruption can be one of the reasons for firms to decide not to grow. We analyzed production efficiency at the aggregate level and provide an approximation proposition that simplifies the computation and interpretation of various industry inefficiency measures proposed in the literature. Moreover, we extended the proposed framework to the meta-technology approach. We found a difference between the group-frontiers and the meta-frontiers. In addition, the meta-technology efficiency (MTE) scores were highest for small-sized firms, in particular, firms with fewer than 50 employees. This finding confirms the differences in the characteristics of firms operating environment across size groups

Ein DEA-basierter Ansatz zur Messung der Performance bei zentralisierten Managementstrukturen

Traditional performance measurement approaches are usually characterized by a number of different limitations. Among other things, these approaches require the subjective determination of weights to aggregate a set of indicators to an overall performance score. Furthermore, traditional approaches are usually not able to incorporate additional improvement potentials that can be received from a centralized management. A performance measurement framework which can overcome these limitations is called data envelopment analysis (DEA). Against this background, this thesis provides a thorough overview of how different degrees of centralization are modeled in the current DEA literature. The systematic literature review identified 135 different approaches that assume a centralized or partially centralized management structure. A concluding discussion of the respective DEA approaches showed two fundamental research gaps. In response to this, this thesis has two fundamental objectives: The first objective is to propose a DEA-based performance measurement approach for measuring performance changes over time. The second objective is to develop another DEA-based approach for comparing the performance of management groups. In contrast to so far developed DEA-models, the here proposed approaches explicitly incorporate the respective management structure. Both DEA approaches thus developed are based on the combination of the metafrontier concept and the Malmquist index. The first approach evaluates productivity changes of operating entities over time and, hence, may indicate potential sources for performance changes. Thereby, the proposed approach preserves the individual characteristics of each local group technology. The second DEA approach proposed here uses the Malmquist index for comparing the performance of management groups. This index accounts for the existence of a central decision maker who can, e.g., undertake resource reallocations to improve the overall performance of its managed group. The applicability and usefulness of both proposed approaches is empirically shown with real-world data from KONE Corporation.Traditionelle Performance Measurement Ansätze gehen mit einer Reihe von Herausforderungen einher. So erfordert die Aggregation unterschiedlicher Kennzahlen zu einem einzelnen Performancemaß die Verwendung von subjektiven Gewichtungen. Darüber hinaus lassen sich in traditionellen Ansätzen nur schwer etwaige Verbesserungspotentiale modellieren, die aus zentralisierten Managementstrukturen resultieren. Eine betriebswirtschaftliche Methode, welche die genannten Limitationen nicht aufweist, ist die Data Envelopment Analysis (DEA). Aufgrund dieser Vorteile wird in dieser Arbeit zunächst ein umfassender Literaturüberblick erarbeitet, wie unterschiedliche Managementstrukturen in einer DEA modelliert werden können. Mithilfe der Literaturrecherche wurden insgesamt 135 unterschiedliche Ansätze ermittelt, die entweder ein vollkommen zentralisiertes oder teilweise zentralisiertes Managementmodell unterstellen. Eine abschließende Diskussion der verschiedenen DEA-Ansätze zeigte allerdings eine Forschungslücke, woraus die beiden folgenden Forschungsziele für diese Arbeit abgeleitet wurden: Einerseits soll ein DEA-basierter Ansatz erarbeitet werden, der zur Messung von Effizienzveränderungen einzelner Produktiveinheiten über die Zeit geeignet ist. Andererseits soll eine DEA-basierte Methode entwickelt werden, welche bei Performancevergleichen zwischen Managementgruppen anwendbar ist. Im Gegensatz zu den bisher in der Literatur diskutierten Ansätzen sollten die entwickelten Methoden dabei die jeweils vorliegende Managementstruktur berücksichtigen. Die entwickelten DEA-Ansätze basieren auf der Kombination des Metafrontier-Konzepts mit dem Malmquist-Index. Der erste Ansatz erlaubt es, Performanceveränderungen von einzelnen Produktiveinheiten über mehrere Zeitperioden zu messen. Im Gegensatz zu konventionellen Metafrontier-basierten Malmquist-Indizes berücksichtigt der vorgeschlagene Ansatz die individuellen Eigenschaften der lokalen Produktionstechnologien. Der zweite vorgeschlagene DEA-Ansatz nutzt den Malmquist-Index für den Vergleich der Performance von Managementgruppen. Der Index berücksichtigt dabei explizit, dass eine zentrale Entscheidungsinstanz existiert, welche Ressourcenumverteilungen durchführen kann. Beide Ansätze werden anhand eines Datensatzes des Unternehmens KONE illustriert