×

Measuring the effects of undesirable outputs on the efficiency of production units. (English) Zbl 1487.90375

Summary: The data envelopment analysis technique produces higher efficiency scores for the assessed decision making units (DMUs) when more input/output factors are considered. This feature generates an intuitively unreasonable result in which the efficiency of a DMU measured considering the accompanying undesirable outputs is greater than or equal to that measured without considering them. In order to obtain a reasonable measure of efficiency, this paper proposes a concept for determining the minimum amount of undesirable outputs that a DMU is allowed to generate based on the assertion of weak disposability, and the results are used to construct the production frontier. The efficiency of the DMUs measured from this frontier can be decomposed into two parts, one of which shows the efficiency of consuming the observed inputs to produce the observed desirable outputs and the other of which, a reduction factor, shows the effect of producing excessive amounts of undesirable outputs on efficiency. A case of thirty paper mills taken from the literature is used to illustrate this idea. The results are helpful for DMU decision-makers to identify sources of inefficiency and for the government to formulate standards for generating allowable amounts of undesirable outputs.

MSC:

90B50 Management decision making, including multiple objectives
Full Text: DOI

References:

[1] Banker, R. D.; Charnes, A.; Cooper, W. W., Some models for estimating technical and scale efficiencies in data envelopment analysis, Management Science, 30, 1078-1092 (1984) · Zbl 0552.90055
[2] Bi, G. B.; Luo, Y.; Ding, J. J.; Liang, L., Environmental performance analysis of Chinese industry from a slacks-based perspective, Annals of Operations Research, 228, 65-80 (2015) · Zbl 1321.90076
[3] Charnes, A.; Cooper, W. W.; Rhodes, E., Measuring the efficiency of decision making units, European Journal of Operational Research, 2, 429-444 (1978) · Zbl 0416.90080
[4] Dakpo, K. H.; Jeanneaux, P.; Latruffe, L., Modelling pollution-generating technologies in performance benchmarking: Recent developments, limits and future prospects in the nonparametric framework, European Journal of Operational Research, 250, 347-359 (2016) · Zbl 1346.91176
[5] Färe, R.; Grosskopf, S., Modeling undesirable factors in efficiency evaluation: Comment, European Journal of Operational Research, 157, 242-245 (2004) · Zbl 1080.90527
[6] Färe, R.; Grosskopf, S.; Lovell, C. A.K.; Pasurka, C., Multilateral productivity comparisons when some outputs are undesirable: A nonparametric approach, The Review of Economics and Statistics, 71, 90-98 (1989)
[7] Kao, C., Network data envelopment analysis: Foundations and extensions (2017), Springer International Publishing: Springer International Publishing Switzerland · Zbl 1358.90001
[8] Kao, C., Measuring efficiency in a general production possibility set allowing for negative data, European Journal Operational Research, 282, 980-988 (2020) · Zbl 1431.90076
[9] Li, M. Q.; Wang, Q., International environmental efficiency differences and their determinants, Energy, 78, 411-420 (2014)
[10] Liu, W. B.; Meng, W.; Li, X. X.; Zhang, D. Q., DEA models with undesirable inputs and outputs, Annals of Operations Research, 173, 177-194 (2010) · Zbl 1186.90075
[11] Lozano, S.; Gutiérrez, E., Slacks-based measure of efficiency of airports with airplanes delays as undesirable outputs, Computers & Operations Research, 38, 131-139 (2011)
[12] Murty, S.; Russell, R. R.; Levkoff, S. B., On modeling pollution-generating technologies, Journal of Environmental Economics and Management, 64, 117-135 (2012)
[13] Pishgar-Komleh, S. H.; Zylowski, T.; Rozakis, S.; Kozyra, J., Efficiency under different methods for incorporating undesirable outputs in an LCA+DEA framework: A case study of winter wheat production, Journal of Environmental Management, 260, Article 110138 pp. (2020)
[14] Scheel, H., Undesirable outputs in efficiency valuations, European Journal of Operational Research, 132, 400-410 (2001) · Zbl 0985.90053
[15] Song, M.; An, Q.; Zhang, W.; Wang, Z.; Wu, J., Environmental efficiency evaluation based on data envelopment analysis: A review, Renewable and Sustainable Energy Reviews, 16, 4465-4469 (2012)
[16] Sueyoshi, T.; Goto, M., DEA radial and non-radial models for unified efficiency under natural and managerial disposability: Theoretical extension by strong complementary slackness conditions, Energy Economics, 34, 700-713 (2012)
[17] Tone, K., A slacks-based measure of efficiency in data envelopment analysis, European Journal of Operational Research, 130, 498-509 (2001) · Zbl 0990.90523
[18] You, S.; Yan, H., A new approach in modelling undesirable output in DEA model, Journal of the Operational Research Society, 62, 2146-2156 (2011)
[19] Zhang, N.; Choi, Y., Environmental energy efficiency of China’s regional economies: A non-oriented slacks-based measure analysis, Social Science Journal, 50, 225-234 (2013)
[20] Zhou, P.; Ang, B. W.; Poh, K. L., Slacks-based efficiency measures for modeling environmental performance, Ecological Economics, 60, 111-118 (2006)
[21] Zhou, P.; Ang, B. W.; Poh, K. L., A survey of data envelopment analysis in energy and environmental studies, European Journal of Operational Research, 189, 1-18 (2008) · Zbl 1144.90425
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. In some cases that data have been complemented/enhanced by data from zbMATH Open. This attempts to reflect the references listed in the original paper as accurately as possible without claiming completeness or a perfect matching.