A Slacks-based Measure of Efficiency of Electric Arc Furnace Activity with Undesirable Outputs

Hao Zhang, Xiang Su, Shilun Ge

.

DOI: 10.4236/jssm.2011.42027                

Abstract

Efficiency reflects a scenario of higher quality product with fewer resource inputs and less pollution discharge. In terms of a manufacturing firm, it means a win-win strategy in both economic and environmental categories. The paper ex-tends the Electric Arc Furnace (EAF) activity management by taking pollution discharge as undesirable outpust. After reviewing relative undesirable outputs DEA literatures and comparing their advantages and shortcomings, the current paper introduces SBM models to treat undesirable outputs and then measures the efficiency of each EAF activity. Based on resources input and activity quantity output and undesirable outputs, the DEA model can evaluate the efficiency of EAF activity. By the input-output combination, the sensitivity analysis is done. At last, the paper demonstrates the ap-plication of efficiency measurement in EAF activity of an iron&steel enterprise. The result implies objectivity, accuracy and practicability of the activity analysis and valuation method based on SBM-Undesirable model.

Keywords

Electric Arc Furnace , Slacks-based Measure, Activity Management, Undesirable Outputs

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	A. Charnes, W. W. Cooper and E. Rhodes, “Measuring efficiency of decision making units,” European Journal of Operational Research, Vol. 2, No. 4, 1978, pp. 429-444.doi:10.1016/0377-2217(78)90138-8
[2]	L. M. Seiford, “Data Envelopment Analysis: The Evolution of the State of the Art (1978-1995),” Journal of Productivity Analysis, Vol. 7, No. 2-3, 1999, pp. 99-137. doi:10.1007/BF00157037
[3]	W. W. Cooper, L. M. Seiford and K. Tone, “Data Envelopment Analysis: A Comprehensive Text with Models, Applications, References, and DEA-Solver Software,” Kluwer Academic, Boston, 2000.
[4]	S. Mota, J. H. Benzecry and R. Y. Qassim, “A Model for the Application of Data Envelopment Analysis in Activity-based Management,” International Journal of Technology Management, Vol. 17, No. 7/8, 1999, pp. 862-868. doi:10.1504/IJTM.1999.002749
[5]	C. Homburg, “Using Data Envelopment Analysis to Benchmark Activities,” International Journal of Production Economics, Vol. 73, No. 1, 2001, pp. 51-58. doi:10.1016/S0925-5273(01)00194-3
[6]	P. Y. Ou, Y. L. Wang and P. X. Wang, “The Application of Composite DEA in Activity Analysis and Evaluation,” Systems Engineering, Vol. 24, No. 6, 2006, pp. 52-57.
[7]	P. Y. Ou and F. J. Wang, “The Resources Utilization Efficiency Evaluation of Activity Based on DEA,” Chinese Journal of Management, Vol. 6, No. 8, 2009, pp. 1061-1065.
[8]	R. Fare, S. Grosskopt, C. A. K. lovell and C. Pasurka, “Multilateral Productivity Comparisons When Some Outputs are Undesirable: A Nonparametric Approach,” Review of Economics and Statistics, Vol. 71, No. 1, 1989, pp. 90-98.doi:10.2307/1928055
[9]	H. Schee, “Undesirable outputs in efficiency valuations,” European Journal of Operational Research, Vol. 132, No. 2, 2001, pp. 400-410. doi:10.1016/S0377-2217(00)00160-0
[10]	L. M. Seiford and J. Zhu, “Modeling Undesirable Factors in Efficiency Evaluation,” European Journal of Operational Research, Vol. 142, No. 1, 2002, pp. 16-20. doi:10.1016/S0377-2217(01)00293-4
[11]	K. Tone, “A Slacks-Based Measure of Efficiency in Data Envelopment Analysis,” European Journal of Operational Research, Vol. 130, No. 3, 2001, pp. 498-509. doi:10.1016/S0377-2217(99)00407-5
[12]	K. Tone, “A Slacks-Based Measure of Super-Efficiency in Data Envelopment Analysis,” European Journal of Operational Research, Vol. 143, No. 1, 2002, pp. 32-41. doi:10.1016/S0377-2217(01)00324-1