Measuring Service Productivity

Measuring Service Productivity

Data Envelopment Analysis (DEA) Identifying Efficient Decision Making Units Measuring Service Productivity Branch Bank Example 1. ACCOUNTING RATIO: COST PER TELLER TRANSACTION HIGHER RATIO WOULD BE INEFFICIENT RELATIVE TO OTHERS, BUT COULD BE EXPLAINED BY: 1. MIX OF OUTPUTS (SELLING CDS VS SIMPLE DEPOSITS) 2. MIX OF INPUTS (USE OF ATMS AND LIVE TELLERS) 2. BROAD BASED MEASURE: RETURN ON INVESTMENT OVERALL IMPORTANT BUT NOT SUFFICIENT TO EVALUATE OPERATING EFFICIENCY OF INDIVIDUAL DECISION MAKING UNIT (DMU) FOR EXAMPLE: A PROFITABLE BRANCH COULD BE THE RESULT OF HIGHER-THAN-AVERAGE PROPORTION OF REVENUE GENERATING TRANSACTIONS RATHER THAN COST-EFFICIENT USE OF RESOURCES. THE DEA MODEL Fractional Form O b je c tiv e F u n c tio n u 1O 1e u 2 O 2 e u M O M e m ax E e v 1 I 1e v 2 I 2 e v N I N e C o n s tr a in ts u 1O 1k u 2 O 2 k u M O M k 1 .0 v 1I1k v 2 I 2 k v N I N k j 0 j =1,2,,M i 0 i= 1,2,,N k 1 , 2 , , K DEA in Standard LP Form (Scaling inputs to sum to 1.0) S T A N D A R D m a x E L P F O R M ( s c a lin g in p u t s t o s u m e

u 1O 1 e u 2O u 2 e M O M e v N o f 1 .0 ) S U B JE C T T O : v1I u 1O 1 e 1 k v 2 I 2 e u 2O v 2 k N I N e u

M O 1 M k v 1 I 1 k v 2 I 2 k I N k w h e re : u v j 0 j 1 , 2 , , M i 0 i 1 , 2 , , N R E C O M M E N D E D S A M P L E S IZ E : K 2 N

M 0 k 1 , 2 , , K Burger Palace Example S U M M A R Y O F O U T P U T S A N D IN P U T S F O R B U R G E R P A L A C E S e r v ic e u n it 1 2 3 4 5 6 M e a ls s o ld 100 100 100 100 100 100 L a b o r -h o u rs 2 4 4 6 8 10 M a te r ia l d o lla r s 200 150 100 100 80 50 L P M O D E L F O R E V A L U A T IO N O F S E R V IC E U N IT 1 m a x E ( S1 ) u11 0 0

s u b je c t to : u11 0 0 v1 2 v 2 2 0 0 u11 0 0 v1 4 v 2 1 5 0 u11 0 0 v1 4 v 2 1 0 0 u11 0 0 v1 6 v 2 1 0 0 u11 0 0 v1 8 v 2 8 0 u11 0 0 v11 0 v 2 5 0 v1 2 v 2 2 0 0 u1 , v1 , v 2 0 0 0 0 0 0 1 0 Burger Palace Productivity Frontier Material dollars 200 S1 (2,200) 150 S2 (4,150) 100 S3 (4,100) S4 (6,100) S5 (8,80) C (5.3, 88.9) 50 S6 (10,50) 0 0 2 4

6 Labor hours 8 10 Summary of DEA Results SUMMARY OF DEA RESULTS Service unit Efficiency rating (E) Efficiency reference set Relative labor-hour value v1 Relative material value v2 S1 S2 1.000 0.857 .1667 .1428 .0033 .0028 S3 S4 1.000 0.889 .0625 .0555 .0075 .0067 S5

0.901 .0568 .0068 S6 1.000 N.A. S1 (.2857) S3 (.7143) N.A. S3 (.7778) S6 (.2222) S3 (.4545) S6 (.5454) N.A. .0625 .0075 CALCULATION OF EXCES INPUTS USED BY UNIT S4 Outputs and inputs Composite reference unit C Reference set S3 Meals Labor-hours Material $ (.7778) (.7778) (.7778) 100 + 4 + 100 +

S6 (.2222) (.2222) (.2222) 100 = 10 = 50 = Excess inputs used S4 100 5.3 88.9 100 6 100 0 0.7 11.1 DEA and Strategic Planning High Profit Low Under-performing potential stars Problem Branches Low Benchmark group Candidates for divestiture Efficiency High

Recently Viewed Presentations

  • Darwin's Finches and Natural Selection - Case study

    Darwin's Finches and Natural Selection - Case study

    D: Birds on the mainland won't evolve, but birds on the islands might. * Charles Darwin Darwin explored these islands from April through October 1835. Entire voyage of The Beagle: Dec 1831 - Oct 1836 When and where he started...
  • Clinical Practice Management of Osteoporosis

    Clinical Practice Management of Osteoporosis

    The WHO & the IOF recommend that the reference technology for the diagnosis of osteoporosis is dual energy X-ray absorptiometry (DXA) applied to the femoral neck. ... Vitamin D-resistant osteomalacia and similar disorders to assess response to treatment.
  • Chapter 8 section 4 Text pages 245 -

    Chapter 8 section 4 Text pages 245 -

    Heartland Theory (1919) Belief that a land-based, not sea-based, power center would dominate the world. Eurasia is the key "Pivot-Area" where the Heartland is located. Advocated limiting the spread and influence of the Heartland and forming an organization to counter...
  • Family structure in Hungary - Urspringschule

    Family structure in Hungary - Urspringschule

    The life expectancy are 79 years for men and 83 years for women, which is among the highest in Europe. … A family usually consists of a mom, a dad and about two children. … Most women are called Anne,...
  • Cybersecurity

    Cybersecurity

    Analytics in Cybersecurity. Where we are. Where we want to be. Analyzing previous cyber threats/attacks. Predict and prevent future attacks. Big Data can store large amounts of data and help analysts examine, observe, and detect irregularities within a network.
  • Mathematics - Dr. Gallegos' Website

    Mathematics - Dr. Gallegos' Website

    "Pure mathematics is, in its way, the poetry of logical ideas."-Albert Einstein ... Key: -Limiting the children to a single example will NOT expand their ability to understand the material it must be an ongoing learning experience. ... Orienting self...
  • Title Safe Area — Please Read - Esri

    Title Safe Area — Please Read - Esri

    Firebug (Mozilla) IE Developer Tools. Chrome's integrated web kit tools. Charles* Development Environments. Microsoft Visual Studio. Eclipse / Flash Builder. Aptana. Web Browser Debugging Tool Links ... Title Safe Area — Please Read Last modified by:
  • Discrimination & Harassment in the Workplace

    Discrimination & Harassment in the Workplace

    Notes on Bullying, Harassment and Armed Robbery ... regime / General Workplace Protections New Right of Entry regime New "Good Faith Bargaining" regime Fair Work Australia up & running Abolishment of individual statutory Agreements 1 January 2010 Modern Awards commence...