The Output Shows the Solution to a DEA Model Where

question 31

Essay

The output shows the solution to a DEA model where facilities in Seaview (S), Farmington (F), Lewiston (L), and San Domingo (D) are compared. The inputs, in order, are number of machines, size of work force, and goodness of location. The outputs, in order, are production, quality rating, and on-time completion percentage. The model examines the efficiency of Lewiston.
MIN
0S+0F+0L+0D+1E
S.T.
1) 1S+1F+1L+1D=1
2) 5S+22F+36L+15D-36E<0
3) 400S+1500F+3150L+1060D-3150E<0
4) 24S+13F+32L+17D-32E<0
5) 800S+2900F+1860L+1700D+0E>1860
6) 95S+92F+83L+94D+0E>83
7) 83S+85F+90L+91D+0E>90
OPTIMAL SOLUTION
Objective Function Value = 0.510 $$\begin{array} { c c c } \text { Variable } & \text { Value } & \text { Reduced Cost } \\\text { S } & 0.000 & 0.385 \\\text { F } & 0.167 & 0.000 \\\text { L } & 0.000 & 0.490 \\\text { D } & 0.833 & 0.000 \\\text { E } & 0.510 & 0.000\end{array}$$ $$\begin{array} { c c c } \text { Constraint } & \text { Slack/Surplus } & \text { Dual Price } \\1 & 0.000 & 1.365 \\2 & 2.208 & 0.000 \\3 & 474.479 & 0.000 \\4 & 0.000 & 0.031 \\5 & 40.000 & 0.000 \\6 & 10.667 & 0.000 \\7 & 0.000 & - 0.021\end{array}$$
a.Is the Lewiston plant efficient? Why or why not? If not, which plants should it emulate in order to improve?
b.How much more production does the composite facility provide than the Lewiston site?
c.What is the quality rating for the composite facility?

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Definitions:

Control Perspective

An approach focusing on the monitoring and adjusting of processes and strategies to achieve desired outcomes or objectives.

Revenue Variance

The difference between how much the revenue should have been, given the actual level of activity, and the actual revenue for the period. A favorable (unfavorable) revenue variance occurs because the revenue is higher (lower) than expected, given the actual level of activity for the period.

Cost Variance

The difference between the expected cost of a project or production process and the actual cost incurred.

Labour Efficiency Variance

A measure used in cost accounting to evaluate the difference between the actual hours worked and the standard hours expected to produce a certain level of output.