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Date Submitted: 05/01/2014 10:23 AM
Evaluating the Relative Efficiency of Quality Cost Management:
Using Data Envelopment Analysis
Haiying Liu
Shandong University of Technology
Shandong Province, P. R. China
Zafar U. Khan, Ph.D.
Eastern Michigan University
Corresponding Author:
Zafar U. Khan, Ph.D.
Professor
College of Business
Eastern Michigan University
Ypsilanti, MI 48197
(734) 487-1261
(734) 487 7099 Fax
Zafar.Khan@Emich.edu
Evaluating the Relative Efficiency of Quality Cost Management:
Using Data Envelopment Analysis
Abstract
While quality has been important since ancient times, it has become a lot more important in today's competitive environment. Many companies realizing the strategic importance of quality have implemented total quality management programs and some have even implemented cost of quality systems. A problem is how to assess overall performance and relative efficiency of the different decision-making units (DMUs) given the many and diverse performance measures used in practice. Particularly because there is no obvious optimal weighting scheme that can be used for all DMUs.
This paper illustrates the use of data envelopment analysis (DEA) for evaluating the relative efficiency of the quality programs implemented by the many DMUs. Besides rating the DMUs as either efficient or inefficient DEA provides insight into the use and relationship of the various inputs and outputs. Thus allowing each DMU to improve its performance and also learn from other DMUs. DEA is a robust technique that measures overall efficiency using multiple measures of inputs and outputs, including non-parametric and has been widely used since 1978 in many diverse environments.
Evaluating the Relative Efficiency of Quality Cost Management:
Using Data Envelopment Analysis
Introduction
Quality has been an important factor in the production of goods and services from ancient times (Fink, 2000). However, to be...