The mystification of operational competitiveness rating analysis

Shouhong Wang and Hai Wang
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Shouhong Wang: Department of Marketing|Business Information Systems, Charlton College of Business, University of Massachusetts Dartmouth, Dartmouth, MA 02747-2300, USA, Postal: Department of Marketing|Business Information Systems, Charlton College of Business, University of Massachusetts Dartmouth, Dartmouth, MA 02747-2300, USA
Hai Wang: Department of Finance and Management Science, Sobey School of Business, Saint Mary's University, Halifax, NS, Canada B3H 3C3, Postal: Department of Finance and Management Science, Sobey School of Business, Saint Mary's University, Halifax, NS, Canada B3H 3C3

Managerial and Decision Economics, 2005, vol. 26, issue 8, pages 535-538

Abstract: This note examines the fault of the operational competitiveness rating analysis (OCRA) method. The premise of the OCRA method requires that a single scalar measurement must be applied to inputs and outputs to calculate the performance ratings for production units. This property renders the OCRA method worthless, since simple comparisons of the aggregated inputs and outputs can generate accurate productive efficiency evaluation results for production units if the simple aggregation can be done. To avoid this problem, the OCRA method includes subjective weighting elements for input and output categories, so called calibration constants, into the performance rating computation. This approach of the OCRA method introduces much confusion for productive efficiency evaluation, and it violates the economics axiom of output|input maximization in its application context. Copyright © 2005 John Wiley & Sons, Ltd.

Date: 2005
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