Production Efficiency Measurement of Sugar Industry in Bangladesh: An Application of Data Envelopment Analysis (DEA)

Md Abu Sina, Md Abdus Sabur, Md Ferdausur Rahman

Abstract


There are fifteen sugar mills in Bangladesh under Bangladesh Sugar and Food Industries Corporation (BSFIC). But most of all the mills are being run with losses. For this reason the researchers have taken an initiative to measure the relative efficiencies of individual small size sugar mills as well as large size sugar mills in Bangladesh and to set a target of minimum utilization of inputs in order to maximize production level compared to relatively efficient sugar mills. Besides, an attempt has been taken to provide suggestions to improve efficiencies of the inefficient sugar mills. The study is based on the average data of 2004 to 2013 of six sugar mills. Data Envelopment Analysis (DEA) is applied for assessing efficiencies of individual selected sugar mills. Only input-oriented DEA and output-oriented DEA with CRS technology are used as the main tools to estimate the efficiency measurement in this paper. The objective of the study is to introduce the technique and demonstrate it through an example to show how relative efficiencies can be determined and identify units that are relatively less efficient. On an average, the technical efficiency of sugar mills in the sample has been found approximately 0.97 percent.

Aus. J. Acc. Eco. Fin. Vol 1(1), October 2015, P 30-40


Keywords


Productive Efficiency; Technical Efficiency; DEA

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