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Short-run and long-run efficiency measures for multiplant firms

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  • Chiang Kao

Abstract

The usual Data Envelopment Analysis (DEA) model for measuring the relative efficiency assumes that all plants belong to distinct firms superior to them. For firms with more than one plant, Koopmans proposes a procedure for deriving the short-run production frontier for each firm. Modifying his idea, a DEA model is constructed in this paper for measuring the short-run efficiency of each plant within a firm. Based on the theory of production economics that the long-run production frontier is an envelop super-imposed upon all short-run production frontiers, another DEA model is constructed to measure the long-run efficiency of every plant. The long-run efficiency is always smaller than or equal to the short-run efficiency. Consequently, it is possible that an inefficient plant can only be improved in the long-run. With the models constructed in this paper, a decision-maker is able to distinguish between what can be achieved in the short-run and what in the long-run. To clarify the idea, an example of Taiwan forests is adopted for illustration. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • Chiang Kao, 2000. "Short-run and long-run efficiency measures for multiplant firms," Annals of Operations Research, Springer, vol. 97(1), pages 379-388, December.
    • Handle: RePEc:spr:annopr:v:97:y:2000:i:1:p:379-388:10.1023/a:1018928324737
    DOI: 10.1023/A:1018928324737
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    Citations

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    Cited by:

    1. Lorenzo Castelli & Raffaele Pesenti & Walter Ukovich, 2010. "A classification of DEA models when the internal structure of the Decision Making Units is considered," Annals of Operations Research, Springer, vol. 173(1), pages 207-235, January.
    2. Barua, Anitesh & Brockett, P. L. & Cooper, W. W. & Deng, Honghui & Parker, Barnett R. & Ruefli, T. W. & Whinston, A., 2004. "DEA evaluations of long- and short-run efficiencies of digital vs. physical product "dot com" companies," Socio-Economic Planning Sciences, Elsevier, vol. 38(4), pages 233-253, December.
    3. Kao, Chiang, 2009. "Efficiency measurement for parallel production systems," European Journal of Operational Research, Elsevier, vol. 196(3), pages 1107-1112, August.

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