Methods in productivity and efficiency analysis with applications to warehousing
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A set of technical issues are addressed related to benchmarking best practice behavior in warehouses. In order to identify best practice, first performance needs to be measured. There are a variety of tools available to measure productivity and efficiency. One of the most common tools is data envelopment analysis (DEA). Given a system that consumes inputs to generate outputs, previous work has shown production theory can be used to develop basic postulates about the production possibility space and to construct an efficient frontier which is used to quantify efficiency. Beyond inputs and outputs warehouses typically have practices (techniques used in the warehouse) or attributes (characteristics of the environment of the warehouse including demand characteristics) which also influence efficiency. Previously in the literature, a two-stage method has been developed to investigate the impact of practices and attributes on efficiency. When applying this method, two issues arose: how to measure efficiency in small samples and how to identify outliers. The small sample efficiency measurement method developed in this thesis is called multi-input / multi-output quantile based approach (MQBA) and uses deleted residuals to estimate efficiency. The outlier detection method introduces the inefficient frontier. Both overly efficient and overly inefficient outliers can be identified by constructing an efficient and an inefficient frontier. The outlier detection method incorporates an iterative procedure previously described, but has not been implemented in the literature. Further, this thesis also discusses issues related to selecting an orientation in super efficiency models. Super efficiency models are used in outlier detection, but are also commonly used in measuring technical progress via the Malmquist index. These issues are addressed using two data sets recently collected in the warehousing industry. The first data set consists of 390 observations of various types of warehouses. The other data set has 25 observations from a specific industry. For both data sets, it is shown that significantly different results are realized if the methods suggested in this document are adopted.