An Evaluation of Cross-Efficiency Methods, Applied to Measuring Warehouse Performance

Bert Balk, René de Koster, Christian Kaps and José Zofío

ERIM Report Series Research in Management from Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam

Abstract: In this paper method and practice of cross-efficiency calculation is discussed. The main methods proposed in the literature are tested not on a set of artificial data but on a realistic sample of input-output data of European ware- houses. The empirical results show the limited role which increasing automation investment and larger warehouse size have in increasing productive performance. The reason is the existence of decreasing returns to scale in the industry, resulting in sub-optimal scales and inefficiencies, regardless of the operational performance of the facilities. From the methodological perspective, and based on a multidimensional metric which considers the capability of the various methods to rank warehouses, their ease of implementation, and their robustness to sensitivity analyses, we conclude to the superiority of the classic Sexton et al. (1986) method over recently proposed, more sophisticated methods.

Keywords: Cross-efficiency methods; warehouse efficiency; automation investment (search for similar items in EconPapers)
JEL-codes: C43 C61 D22 D24 L81 L87 (search for similar items in EconPapers)
Pages: 42
Date: 2017-12-06
New Economics Papers: this item is included in nep-eff
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Citations: View citations in EconPapers (6)

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