Maximum slacks-based measure of efficiency in network data envelopment analysis: A case of garment manufacturing

The conventional slacks-based measure (SBM) model is widely applied to measure the relative efficiency of a set of decision making units (DMUs) because the measured efficiency is not affected by weakly efficient frontiers. This model seeks the target point on the production frontier that is farthest to the assessed DMU to calculate efficiency, which requires more effort for the DMU to reach to become efficient. This paper develops a model to calculate the maximum SBM efficiency for general network production systems. Different from the conventional minimum SBM efficiency that is always less than the radial efficiency for inefficient DMUs, the maximum SBM efficiency can be greater than the radial efficiency. The measured efficiency satisfies the monotonicity property. The efficiencies of the component divisions of the network system can also be calculated at the same time. A garment manufacturing company whose major operations comprise cutting and sewing is studied using the developed model. The results show that the average maximum SBM efficiency is 35 % higher than the average minimum SBM efficiency and the sewing operation contributes more to the system efficiency than the cutting operation does.

Automated summary

This study develops a model to calculate the maximum SBM efficiency for general network production systems, and applies it to a garment manufacturing company. The results show that the sewing operation contributes more to the system efficiency than the cutting operation does.