Assessing supply chain financial performance using DEA modelling Online publication date: Thu, 30-Jan-2014
by Ioannis E. Tsolas
International Journal of Business Performance and Supply Chain Modelling (IJBPSCM), Vol. 5, No. 3, 2013
Abstract: The purpose of this article is to derive synthetic or composite indicators (CIs) of supply chain performance using DEA modelling. DEA is employed to construct two types of consolidated performance metrics using single (component) financial performance indicators such as return on assets (ROA), sales-to-inventory ratio, and trailing 12 months of growth. The first type of metrics is based on classic DEA models, allowing for flexibility in the choice of weights; the second type is based on a common set of weights (CSW) model. In light of the results, the proposed models reveal the importance of ROA in deriving the consolidated metric. The less important component indicator is the sales-to-inventory ratio. The derivation of composite indicators based on an extension of the optimisation process is an important addition to the existing literature on supply chain, integrating DEA modelling with multiple objective programming.
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