Cost-Effectiveness and Economies of scope on network processes with shared resources and resources recovered from undesirable output

Abstract

Many companies and manufacturing industries produce their final product after going through several stages. Normally, in addition to the desirable products, these companies also have undesirable products that are considered as non-retrieval final products. However, by adding a stage for correction and recycling, their undesirable products can be used as resources, which improves economies of scope and cost-effectiveness. The purpose of this paper is to provide models for evaluating economies of scope and cost-effectiveness in two-stage supply chain systems which undesirable products will be given to the second stage for processing and modification and will be returned to the first stage after re-modification. By examining the characteristics of the proposed models, the effect of undesirable intermediate products between stages on cost-effectiveness and economic efficiency has been measured and evaluated. The results show that the proposed models are more accurate than the conventional model and the ability to effectively distinguish between cost and economic efficiency has been significantly improved. It is also possible to study the economic efficiency in the simultaneous production of products in the proposed models.

Keywords

• data envelopment analysis
• two stage supply chain
• cost effectiveness
• economies of scope
• undesirable intermediate products
• shared resources