EFFICIENCY EVALUATION OF INDIAN PLASTIC MANUFACTURING UNITS USING SLACK BASED DATA ENVELOPMENT ANALYSIS

Abstract

Performance measurement of any industry is very crucial in order to cope with the competition, the efficiency analysis is
considered as one of the most valuable and essential tools for the same. In this paper, the efficiency is tested for plastic using Data
Envelopment Analysis (DEA), which is an important raw-material for many industries. Though the profit after sales of plastic
industries exhibits fixed random effects over the years, none of the independent variables are statistically significant. Data
Envelopment Analysis has varied applications in measuring comparative efficiency of decision-making units. One of the prime
applications is used to measure the efficiency of the manufacturing companies considering discretionary and non-discretionary inputs and to find out the lacks of each unit to increase their performance. This paper calculated the technical efficiency of the 28 plastic manufacturing units of India from 2018-20. The non-parametric DEA approach is used for compute the efficiency score. Furthermore, the results classify the numerous firms according to their performance and identify the "best." Similarly, efficiency methodologies evaluate performance compared to the most efficient organizations. Slag based efficiency analysis is used to evaluate the performance of plastic manufacturing firms. The model considers the profit after tax deduction as an output and raw material, employee benefits, power fuel and lease rent as input variables respectively. By planning their inputs and outputs in conjunction with efficiency that their competitors have attained, plastic manufacturing firms can emulate the efficiency of their competitors. The firms which are more efficient would surely get more global orders and can gain competitive advantage over their competitors.