DATA ENVELOPMENT ANALYSIS WITH IMPRECISE DATA: AN APPLICATION OF TAIWAN MACHINERY FIRMS

Abstract

Technology and management are two broad categories of factors that have major influence on the productivity of manufacturing firms. The ratio of the actual productivity of a firm to its maximal productivity is a measure of efficiency. Since the automation technology level and production management achievement of a firm cannot be measured precisely, a fuzzy data envelopment analysis (FDEA) model is applied to calculate the efficiency scores of a sample of machinery firms in Taiwan. Different from the conventional crisp DEA, the efficiency scores calculated from the FDEA model are fuzzy numbers, in that ranges of values at different possibility levels rather than a single crisp value are provided. When the observations are fuzzy in nature, the FDEA methodology avoids the top management from being over-confident with the results as opposed to that of using the conventional DEA methodology by simplifying the fuzzy observations to crisp values.

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