Production with storable and durable inputs: Nonparametric analysis of intertemporal efficiency
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Production with storable and durable inputs : Nonparametric analysis of intertemporal efficiency. / Cherchye, Laurens; De Rock, Bram; Kerstens, Pieter Jan.
In: European Journal of Operational Research, Vol. 270, No. 2, 2018, p. 498-513.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Production with storable and durable inputs
T2 - Nonparametric analysis of intertemporal efficiency
AU - Cherchye, Laurens
AU - De Rock, Bram
AU - Kerstens, Pieter Jan
PY - 2018
Y1 - 2018
N2 - We propose a nonparametric methodology for intertemporal production analysis that accounts for durable as well as storable inputs. Durable inputs contribute to the production outputs in multiple consecutive periods. Storable inputs are non-durable and can be stored in inventories for use in future periods. We explicitly model the possibility that firms use several vintages of the durable inputs, i.e. they invest in new durables and scrap older durables over time. Furthermore, we allow for production delays of durable inputs and storage costs for storable inputs. We characterize production behavior that is dynamically cost efficient, which allows us to evaluate the efficiency of observed production decisions. For cost inefficient behavior, we propose a measure to quantify the degree of inefficiency. An attractive feature of this measure is that it can be decomposed in period-specific cost inefficiencies. We demonstrate the usefulness of our methodology through an application to the Italian manufacturing sector of fabricated metal products over the period 1995–2007 drawn from the AMADEUS dataset.
AB - We propose a nonparametric methodology for intertemporal production analysis that accounts for durable as well as storable inputs. Durable inputs contribute to the production outputs in multiple consecutive periods. Storable inputs are non-durable and can be stored in inventories for use in future periods. We explicitly model the possibility that firms use several vintages of the durable inputs, i.e. they invest in new durables and scrap older durables over time. Furthermore, we allow for production delays of durable inputs and storage costs for storable inputs. We characterize production behavior that is dynamically cost efficient, which allows us to evaluate the efficiency of observed production decisions. For cost inefficient behavior, we propose a measure to quantify the degree of inefficiency. An attractive feature of this measure is that it can be decomposed in period-specific cost inefficiencies. We demonstrate the usefulness of our methodology through an application to the Italian manufacturing sector of fabricated metal products over the period 1995–2007 drawn from the AMADEUS dataset.
KW - Cost minimization
KW - Data envelopment analysis
KW - Dynamic efficiency
KW - Production delay and storage costs
KW - Storable and durable inputs
U2 - 10.1016/j.ejor.2018.04.002
DO - 10.1016/j.ejor.2018.04.002
M3 - Journal article
AN - SCOPUS:85046123470
VL - 270
SP - 498
EP - 513
JO - European Journal of Operational Research
JF - European Journal of Operational Research
SN - 0377-2217
IS - 2
ER -
ID: 197685800