Performances Management When Modelling Internal Structure of a Production Process

Claudio Pinto

International Journal of Business and Management, 2021, vol. 15, issue 7, 133

Abstract: Performance management is a central point for both public and private organizations. In the data envelopment analysis (DEA) method, performance management takes the form of measuring relative efficiency. Furthermore, considering each organization and or production process as a black box, inputs are transformed into outputs. In reality, production organizations or processes are composed of different parts that carry out different related activities. For this reason, modeling the internal structure of a production process like a system of interconnected parts makes it possible to measure its performance at the sub-process level. In this paper, we hypothesized a production process, made up of three interconnected parts. It is a new strategy to acquire relative efficiency consisting of building a block inside the system with at least two sub-processes. This step refers to a basic model of relational Network Data Envelopment Analysis (NDEA). Also, we used the additive decomposition formula to measure the efficiency of the whole process. We highlighted the differences in the measurement, between the direct application of the relational NDEA model and the measurement with the block approach model.We compared the cumulative empirical distribution functions of the efficiency scores of a sub-process with the decomposition formula multiplicative and our approach. In conclusion, the paper proposes, a new strategy to measure the relative performances of a production process model as a network system of three subprocesses, which combines the NDEA and the DEA. This allows us to reevaluate, the indications of policy at the individual sub-process level (block). Moreover, it is a versatile approach which allows aggregation of the sub-processes in blocks, according to the particular policy requirements, legislative technological constraints, etc.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ibn:ijbmjn:v:15:y:2021:i:7:p:133

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