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Efficiency Measurement in Special Production Stages

  • Chiang Kao
Chapter
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 240)

Abstract

The preceding three chapters discuss how to measure the efficiency of a DMU based on the production frontier constructed from the peer DMUs. The production possibility set is assumed to be convex. In the classical production theory, production is separated into three stages, as depicted in Fig. 5.1 (Ferguson and Gould 1986). At the beginning, the output rises at an increasing rate as the input increases, then at a decreasing rate, and finally at a negative rate. The first stage corresponds to use of the variable input X to point b, where the average product (AP) achieves its maximum. At this point the marginal product (MP) equals the average product. Stage II starts from this point to point c, where the marginal product of X drops to zero and the total product (TP) of X culminates. Stage III corresponds to use of the variable input X to the right of this point, where the marginal product is negative.

Keywords

Efficiency Score Marginal Product Production Possibility Output Efficiency Free Disposal Hull 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer International Publishing Switzerland 2017

Authors and Affiliations

  • Chiang Kao
    • 1
  1. 1.Department of Industrial and Information ManagementNational Cheng Kung UniversityTainanTaiwan

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