Assessing comparative production efficiencies for product line management

Abstract

Product line management involves product expansion or elimination depending on various factors, for example, production processes and demands in the market. This study focuses on measuring product performance for a firm’s product line management, using parametric and non-parametric approaches. First, we choose variables related to the production and demand of products and assess the comparative performance of product groups and individual products using data envelopment analysis (DEA). Second, we attempt to detect possible performance differences among the product groups using one-way analysis of variance. Third, we identify the sources of inefficiency using appropriate DEA scores and offer some managerial insights. Last, we try to confirm the determinants of product performance using Tobit regression analysis. The major contribution of this study is the use of a novel approach for product line management by measuring the performance of product groups and individual products using pertinent variables. The approach used in this study is applicable to various manufacturing and service industries. The limitations of this study are the number of product groups selected and examination of performance using cross-sectional data.

Keywords:

• product performance
• product line management
• data envelopment analysis
• Tobit regression analysis