(An) efficiency analysis of tobacco manufacturing plants based on data envelopment analysis

Abstract

Korea Tobacco & Ginseng Corporation has faced the difficulty in the domestic market since the competition from foreign producers brought on by market opening in 1987 and the privatization from a monopoly dealing in cigarettes. We need to evaluate the operating efficiency in a competitive environment and improve the performance of inefficient plants. In this paper, we present DEA(Data Envelopment Analysis) model for an efficiency analysis of tobacco manufacturing plants. DEA has been effectively applied to various areas which need the evaluation of relative efficiency. We apply DEA model that is input-oriented model and output-oriented model for an efficiency analysis. The DEA methodology provides the new economic approach for improving the efficiency in public manufacturing plant.