Title: A preliminary study on using Data Envelopment Analysis (DEA) in measuring supply chain efficiency

Authors: Wai Peng Wong, Wikrom Jaruphongsa, Loo Hay Lee, Kuan Yew Wong

Addresses: Department of Industrial and Systems Engineering, National University of Singapore, 10 Kent Ridge Crescent, Singapore. ' Department of Industrial and Systems Engineering, National University of Singapore, 10 Kent Ridge Crescent, Singapore. ' Department of Industrial and Systems Engineering, National University of Singapore, 10 Kent Ridge Crescent, Singapore. ' Faculty of Mechanical Engineering, Universiti Teknologi Malaysia, 81310 UTM Skudai, Johor, Malaysia

Abstract: This paper illustrates the use of Data Envelopment Analysis (DEA) in measuring supply chain efficiency. Two models were developed – Technical Efficiency (TE) model and Cost Efficiency (CE) model. The information obtained enable managers to identify inefficient operations and take appropriate actions for improvement. The opportunity cost serves as a good reference on resource allocations. The models are further enhanced with scenario analysis to derive more meaningful insights for resources planning. The study proves the usefulness of DEA as a decision-making tool in supply chain. Future research could look into the possibility of modelling DEA in a stochastic supply chain environment.

Keywords: data envelopment analysis; DEA; supply chain efficiency; technical efficiency; cost efficiency; allocative efficiency; opportunity cost; supply chain management; SCM; resource allocation; scenario analysis; resource planning.

DOI: 10.1504/IJASS.2007.015588

International Journal of Applied Systemic Studies, 2007 Vol.1 No.2, pp.188 - 207

Published online: 01 Nov 2007 *

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