Financing capacity planning with environmental considerations: A non-parametric analysis & nbsp;

Motivated by the challenge of efficient capacity planning among firms with limited resources, we explore the interplay between financing and production planning with environmental considerations. The sep-aration of these decisions may lead to biased estimation of capacity utilization. Therefore, we develop a new two-stage data envelopment analysis approach for joint optimization of capacity investment and resource allocation, allowing for a finance-based expansion strategy given the pollution-generating tech-nologies. Moreover, we provide a practical method to determine the lower and upper bounds to miti-gate the under-investment or over-investment problems. Our findings reveal that the financing expansion practice can not only help to reduce inefficiencies resulted from conventional capacity planning strate-gies, but also provide an efficient technique to coordinate production and sustainability in a win-win situation. We illustrate the proposed approach by an empirical investigation to industrial production and wastewater treatment systems, the results validate the importance of adopting the financing expansion practice, especially for decision making units (regions) with high productivity. & COPY; 2023 Elsevier Ltd. All rights reserved.

Automated summary

Motivated by the challenge of efficient capacity planning among firms with limited resources, this research explores the interplay between financing and production planning with environmental considerations. A new two-stage data envelopment analysis approach is developed to optimize capacity investment and resource allocation, considering pollution-generating technologies. Findings reveal that financing expansion practice reduces inefficiencies and coordinates production and sustainability effectively.