Incorporating Quality and Operational Factors in Ranking of Production Lines Using Data Envelopment Analysis

The competition in the Fast Moving Consumer Goods (FMCG) industry is high, especially in the perishable goods sector. Manufacturers need to compete for the market share as the demand is limited. For companies to have competitive advantage, they need to operate efficiently, and ranking their production lines will help identify the efficient and most important lines that contribute to their efficiency. This study aims to evaluate efficiency and ranking of production lines by incorporating both operational and quality factors using Ranking models in Data Envelopment Analysis (DAE). A new Modified ranking model is proposed by comparing standard ranking model and modified DAE models. Standard ranking model and modified version are used on a data which collocated from a beverage producing company in Cyprus. It is shown that the modified model will help to identify the efficient production lines. Also the results of the study will help management in proper resources distribution for efficiency improvement and budget planning. The study shows that can production line is the most efficient production line among the five production lines evaluated under standard and modified DAE models, and Pet-2 and Premix line are ranked among the highest by the modified ranking models. The analysis shows that, to improve the efficiency and rank of production lines, combination of operational and quality factor needs to be improved together. Keywords: data envelopment analysis, production lines, quality factors, operational factors, modified BCC, super efficiency.