A NEW MODELING APPROACH FOR UNDESIRABLE FACTORS IN EFFICIENCY EVALUATION OF CEMENT INDUSTRY WITH FOUR STAGES STRUCTURE BASED ON PIECEWISE LINEAR NDEA MODEL

Abstract

The undesirable outputs have a negative impact on the efficiency of DMUs and will be unavoidable. So, a method for evaluating efficiency should be able to consider nonlinear value of undesirable outputs and improve efficiency of DMUs with decreasing undesirable outputs and increasing desirable ones. Network data envelopment analysis (NDEA) models consider the internal structure of a production system while measuring efficiencies, But are based on the assumption that the weights coupled with the ratio scales of the inputs and outputs imply linear value functions. Linear value may not properly show the differences in the value obtained from one DMU to another. So, this paper propose a new model according to the NDEA technique and a piecewise linear function, which considers the effects of undesirable outputs in efficiency evaluation and distinguishes the valuation between different amount of undesirable outputs have produced by different DMUs. The proposed model was employed to evaluate efficiency of the 42 cement companies.