Question
A consumer advocacy group would like to evaluate the efficiency of three airline companies with respect to several criteria that are important to consumers. The
A consumer advocacy group would like to evaluate the efficiency of three airline companies with respect to several criteria that are important to consumers. The three companies are Beta, Unified, and Southeast. The output measures are identified as an average minute late arrival, number of luggage losses per 10,000 customers, weighting time for check-in, friendliness, and quality of air service (the result of a questionnaire that measured this output on a 100-point scale). The input measures were labor cost per day, number of flights per day, and overhead cost per day. The results are summarized below:
Analysis of Airline Efficiency
Airlines | |||
Beta | Unified | Southeast | |
Input measures | |||
Labour cost/day | 8,000,000 | 10,000,000 | 6,000,000 |
Overhead cost/day | 2,500,000 | 3,000,000 | 2,000,000 |
Number of flights/day | 300 | 400 | 200 |
Output measures | |||
Average minutes late arriving | -15 | -20 | -7 |
Number of luggage losses | -10 | -15 | -5 |
Waiting time for check-in | -10 | -20 | -5 |
Friendliness of air service | 85 | 80 | 95 |
Note that a minus sign is included for the first three output measures: the higher the value, the better the measure. In other words, if the average minutes late are -15, the airplanes
are late an average of 15 minutes. Note that the positive values for these three measures are impossible.
Use DEA and determine the relative efficiency of the three airline companies.
Step by Step Solution
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answer Using data envelopment analysis DEA the relative efficiency of the three airline companies can be determined According to the results Beta airline is the most efficient with a score of 150 Unif...Get Instant Access to Expert-Tailored Solutions
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