An Evaluation of Cross-Efficiency Methods, Applied to Measuring Warehouse Performance

42 Pages Posted: 7 Dec 2017 Last revised: 8 Jun 2019

See all articles by Bert M. Balk

Bert M. Balk

RSM Erasmus University

M. B. M. de Koster

Erasmus University Rotterdam (EUR) - Department of Technology and Operations Management

Christian Kaps

University of Pennsylvania - The Wharton School

José L. Zofío

Universidad Autónoma de Madrid; Erasmus Research Institute of Management (ERIM)

Date Written: December 6, 2017

Abstract

In this paper method and practice of cross-efficiency calculation is discussed. The main methods proposed in the literature are tested not on a set of artificial data but on a realistic sample of input-output data of European warehouses. The empirical results show the limited role which increasing automation investment and larger warehouse size have in increasing productive performance. The reason is the existence of decreasing returns to scale in the industry, resulting in sub-optimal scales and inefficiencies, regardless of the operational performance of the facilities. From the methodological perspective, and based on a multidimensional metric which considers the capability of the various methods to rank warehouses, their ease of implementation, and their robustness to sensitivity analyses, we conclude to the superiority of the classic Sexton et al. (1986) method over recently proposed, more sophisticated methods.

Keywords: Cross-efficiency methods, warehouse efficiency, automation investment

JEL Classification: C43, C61, D22, D24, L81, L87

Suggested Citation

Balk, Bert M. and de Koster, M.B.M. René and Kaps, Christian and Zofío, Jose L., An Evaluation of Cross-Efficiency Methods, Applied to Measuring Warehouse Performance (December 6, 2017). Available at SSRN: https://ssrn.com/abstract=3083526 or http://dx.doi.org/10.2139/ssrn.3083526

Bert M. Balk (Contact Author)

RSM Erasmus University ( email )

Burg Oudlaan 50
Rotterdam, 3062 PA
Netherlands

HOME PAGE: http://www.rsm.nl/bbalk

M.B.M. René De Koster

Erasmus University Rotterdam (EUR) - Department of Technology and Operations Management ( email )

RSM Erasmus University
PO Box 1738
3000 DR Rotterdam
Netherlands
+31 10 408 1719 (Phone)
+31 10 408 9014 (Fax)

HOME PAGE: http://www.rsm.nl/rdekoster

Christian Kaps

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Jose L. Zofío

Universidad Autónoma de Madrid ( email )

Francisco Tomás y Valiente, 5
Madrid, Madrid 28049
Spain
914972406 (Phone)

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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