Relative Efficiency Measurement of Enterprises Operating in the Oltu Stone Industry Using Data Envelopment Analysis

Abstract

The city of Erzurum is emerging as one of the most popular jewelry centers in Turkey, principally due to its possession of mines for precious stones, and in particular for Oltu stone. Oltu stone is paramount to the international image of the city, and its contribution to the local and national economy is significant. Although recent studies have underscored the enormous potential of the Oltu stone industry, it is encumbent on the enterprises concerned to use their resources effectively and efficiently in order to reduce their costs, and they are also advised to improve service quality and thus satisfy customer needs more closely. With these aims in mind, Data Envelopment Analysis provides a convenient statistical technique that enables the analyst to measure the relative efficiencies of enterprises. This linear-programming-based technique can be used to identify suggestions for improvement with the goal of achieving greater efficiency. This paper uses Data Envelopment Analysis to perform a relative efficiency analysis of enterprises operating in the Oltu stone industry and presents alternatives whereby inefficient enterprises may become more efficient. The paper makes use of output-oriented CCR and BCC models to specify the scenario by calculating three different efficiency scores.

Operational efficiency of shipping companies

“…The CCR model presupposes that there is no significant relationship between the scale of operations and efficiency by assuming constant returns to scale (CRS) and is only justifiable when all decision-making units are operating at an optimal scale. Therefore, Banker et al (1984) extend the CCR model by relaxing the CRS assumption and distinguish between technical and scale inefficiencies by estimating pure technical efficiency at the given scale of operation (Talas et al, 2013).…”

“…The analyses of efficiency thus far via DEA and SFA measures reflect the level of company managerial decision making vis-a-vis optimal use of inputs. Companies can be considered technically efficient if they are able to achieve maximum output from their input sets (Talas et al, 2013), or minimize input consumption to produce certain output levels (Kuwahara et al, 2013). Higher efficiency can be achieved if good managerial decisions are made on resources, especially on financial investment.…”