A Slacks-based Measure of Efficiency of Electric Arc Furnace Activity with Undesirable Outputs
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Abstract
Efficiency reflects a scenario of higher quality product with fewer resource inputs and less pollution discharge. In terms of a manufacturing firm, it means a win-win strategy in both economic and environmental categories. The paper ex-tends the Electric Arc Furnace (EAF) activity management by taking pollution discharge as undesirable outpust. After reviewing relative undesirable outputs DEA literatures and comparing their advantages and shortcomings, the current paper introduces SBM models to treat undesirable outputs and then measures the efficiency of each EAF activity. Based on resources input and activity quantity output and undesirable outputs, the DEA model can evaluate the efficiency of EAF activity. By the input-output combination, the sensitivity analysis is done. At last, the paper demonstrates the ap-plication of efficiency measurement in EAF activity of an iron&steel enterprise. The result implies objectivity, accuracy and practicability of the activity analysis and valuation method based on SBM-Undesirable model.
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