TY - JOUR
T1 - Measuring the effects of undesirable outputs on the efficiency of production units
AU - Kao, Chiang
AU - Hwang, Shiuh Nan
N1 - Funding Information:
The authors are grateful for the constructive comments of the two anonymous reviewers and also acknowledge the financial support of the Ministry of Science and Technology of the Republic of China (Taiwan), under grant MOST108–2410-H-006- 102-MY3.
Funding Information:
The authors are grateful for the constructive comments of the two anonymous reviewers and also acknowledge the financial support of the Ministry of Science and Technology of the Republic of China (Taiwan), under grant MOST108?2410-H-006- 102-MY3.
Publisher Copyright:
© 2020 Elsevier B.V.
PY - 2021/8/1
Y1 - 2021/8/1
N2 - 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.
AB - 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.
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U2 - 10.1016/j.ejor.2020.11.026
DO - 10.1016/j.ejor.2020.11.026
M3 - Article
AN - SCOPUS:85097053077
SN - 0377-2217
VL - 292
SP - 996
EP - 1003
JO - European Journal of Operational Research
JF - European Journal of Operational Research
IS - 3
ER -