Evaluating the Performance of Decision Making Units in the Food Production Industry

Abstract

The proposed research focuses on the food production industry. More specifically, we are interested in evaluating the performance of this industry at firm-level. This will provide us the possibility to identify high performing firms, use them as reference units and analyze their common policies and characteristics. Since this study deals with evaluating the relative performance of one unit compared to others, the most appropriate method to be used is Data Envelopment Analysis (DEA). A major benefit of the DEA methodology is that, it supports the manager in order to take decisions in difficult cases, where complex relations exist between the multiple inputs and outputs involved in the activities of his/her company. This chapter presents an extensive case study involving the use of a well known Decision Support System (DSS) entitled DEA-Solver. For the purposes of this research, the most recent data available at the time of writing have been chosen, published by the Joint Research Centre (JRC) of the European Commission. Such a choice ensures the credibility, as well as the conformity of the sampled data. The proposed model uses several variables as inputs and outputs, i.e. the number of employees, capital expenditure, R&D investment, net sales, and operating profit. Furthermore, this research aims to identify key factors / policies, which play an important role in the success of a food producer. We believe that, these findings will be of great interest to all companies in the food production industry.