CLASSIFICATION PRESERVATION OF EFFICIENT TOTAL MANUFACTURING SECTORS OF INDIAN STATES AND UNION TERRITORIES - A DEA STUDY BASED ON FREE DISPOSABLE HULL

E.Ravi; C. Subbarami Reddy

Volume : VIII, Issue : XI, November - 2018

CLASSIFICATION PRESERVATION OF EFFICIENT TOTAL MANUFACTURING SECTORS OF INDIAN STATES AND UNION TERRITORIES - A DEA STUDY BASED ON FREE DISPOSABLE HULL

E. Ravi, C. Subbarami Reddy

Abstract :

For efficiency measurement one needs a frontier and a distance function. Frontier production function is envelopment surface of a production possibility set. Very widely used production possibility sets in Data Envelopment Analysis (DEA) are convex and non–convex, that are supported by the postulates of inclusion, free disposability and minimum extrapolation. Distance function helps to project inefficient production plan onto the envelopment surface, there by provides an efficiency score, efficient peer(s), and bench marks for inefficient Decision Making Units (DMUs). DMUs are primarily categorized into two subsets constituting efficient and inefficient production plans.

This study aimed at identifying efficient total manufacturing sectors from 34 total manufacturing sectors of Indian States and Union Territories, and examine the stability of them to remain efficient under proportional input expansion and output contraction. The production possibility set whose envelopment surface is choosen as DEA frontier is Free Disposable Hull (FDH).