A Study of the Efficiency of Polish Foundries Using Data Envelopment Analysis

Abstract

The article presents a study on the effectiveness of the foundries using Data Envelopment Analysis (DEA) method. The aim of the article is to analyze the usefulness of DEA method in the study of the relative efficiency of the foundries. DEA is a benchmarking technique based on linear programming to evaluate the effectiveness of the analyzed objects. The research was conducted in four Polish and two foreign plants. Evaluated foundries work in similar markets and have similar production technology. We created a DEA model with two inputs (fixed assets and employment) and one output (operating profit). The model was produced and solved using Microsoft Excel together with its Solver add-in. Moreover, we wrote a short VBA script to perform automating calculations. The results of our study include a benchmark and foundries’ ranking, and directions to improve the efficiency of inefficient units. Our research has shown that DEA can be a very valuable method for evaluating the efficiency of foundries.

Keywords

• Benchmarking
• Data Envelopment Analysis
• Application of information technology to the foundry industry