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Reliable estimation of suppliers’ total cost of ownership: An imprecise data envelopment analysis model with common weights

Amir Shabani, Franco Visani, Paolo Barbieri, Wout Dullaert and Daniele Vigo

Omega, 2019, vol. 87, issue C, 57-70

Abstract: Total cost of ownership (TCO) is a management accounting technique that evaluates the total cost of a business partnership using a time-consuming activity-based costing procedure. Studies have suggested that TCO-based data envelopment analysis (DEA) can effectively estimate the results of TCO with substantially less effort and time; however, its adoption in practice is limited due to certain shortcomings. First, managers struggle to understand and accept the uncommon weighting schemes of existing TCO-based DEA models because traditional TCO analyses require a common set of weights. Second, both the traditional TCO approach and TCO-based DEA models are designed to handle precise data, whereas TCO analyses often involve imprecise data from conflicting data sources and estimations.

Keywords: Total cost of ownership; Data envelopment analysis; Supplier evaluation; Imprecise data; Common set of weights (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.omega.2018.08.002

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