A Holistic Approach Model for Realistic Goal-setting for Efficiency Enhancement With Application to the Indian Power Sector

Abstract

This article evaluates the performance of 29 electricity distribution divisions of the Indian state Uttarakhand in terms of overall efficiency through data envelopment analysis (DEA) and compares the result with an analysis based on cross efficiency—a method for peer-appraisal. The introduction of cross efficiency highlights the falsely indicated efficient divisions through the measurement of a “false positive index.” The main objective of this work is to identify the apparent “overall efficient” divisions as indicated by DEA analysis solely. Cluster analysis provides more appropriate targets to be used as a benchmark by the poorly performing divisions. The findings of this article can be instrumental to managers and policy makers to adopt measures that would be beneficial to the improvement of inefficient divisions.

Keywords:

• cross efficiency
• data envelopment analysis (DEA)
• false positive index (FPI)overall efficiency