Company-wide production planning using a multiple technology DEA approach

Abstract

In this paper, Data Envelopment Analysis is used to determine the target output levels (and corresponding required inputs) for the multiple facilities under the responsibility of a Top Decision Maker. The proposed approach aims at minimizing the input costs incurred to attain specified total, company-wide output levels. Specific features of the proposed approach are the consideration of multiple technologies, lower and upper bounds on the production levels of each plant and the possibility of shutting down a plant, with the corresponding costs, if necessary. The consideration of multiple technologies, in particular, takes into account the existence of heterogeneity within the company's facilities. In that scenario, grouping all plants within a single technology gives misleading results.

Keywords:

• production planning
• centralized DEA
• multiple technologies
• input cost minimization
• plant shutdown

Acknowledgements

This research was carried out with the financial support of the Spanish Ministry of Science grant DPI2010-16201, and FEDER. The author would also like to thank the reviewers for their constructive and helpful remarks and suggestions.