Application of Data Envelopment Analysis in Measuring the Relative Efficiency of Local Telephone Exchanges:A Case Study of Telecommunication Region of East Azerbaijan
Application of Data Envelopment Analysis in Measuring the Relative Efficiency of Local Telephone Exchanges:
A Case Study of Telecommunication Region of East Azerbaijan
Subject Areas : Management (Operations Research)
Ebrahim Keivan
1
,
Soleyman Iranzadeh
2
1 - Ph.D. Candidate, Department of Information Technology Management, Central Tehran Branch, Islamic Azad University, Tehran, Iran
2 - Professor, Department of Industrial Management, Tabriz Branch, Islamic Azad University, Tabriz, Iran
Keywords: Data Envelopment Analysis (DEA), Efficiency, Performance improvement strategies, telecommunication exchanges,
Abstract :
After the privatization and acceptance of Iran Telecommunication Company in the stock exchange, it is inevitable for the shareholders to know the efficiency status of telecommunication exchanges. The present study seeks to answer the fundamental question of how inefficient telephone exchanges can be brought to the brink of efficiency. To this end, by collecting the opinions of experts through a pairwise comparison questionnaire and analyzing the data using the ANP method, the effective variables in the efficiency of the exchanges have been identified. The raw data have been prepared from the statistics and evaluation scores obtained from the "Planning" and "Inspection and Evaluation" departments and the financial statements up to 1396, which have been legally audited. Then, using data envelopment analysis (DEA) method and in the conditions of "returns to fixed and variable scale", the efficiency score of the calculation exchanges, ranking and finally the strategies to improve the efficiency of inefficient exchanges have been extracted. The difference in the number of inefficient exchanges in the two scales indicates the proof of the theory of "scale inefficiency", the non-functioning of the exchanges at the optimal scale and the waste of resources by the exchanges. The weak position of the counties in the ranking table necessitates the selection of "heads of telecommunications of the counties" according to individual and professional competencies. Also, it was found that the lack of "competitive-motivational environment", "decision-making power" and "risk-taking" and the existence of "various organizational and legal restrictions" are important factors in the inefficiency of the exchanges.
After the privatization and acceptance of Iran Telecommunication Company in the stock exchange, it is inevitable for the shareholders to know the efficiency status of telecommunication exchanges. The present study seeks to answer the fundamental question of how inefficient telephone exchanges can be brought to the brink of efficiency. To this end, by collecting the opinions of experts through a pairwise comparison questionnaire and analyzing the data using the ANP method, the effective variables in the efficiency of the exchanges have been identified. The raw data have been prepared from the statistics and evaluation scores obtained from the "Planning" and "Inspection and Evaluation" departments and the financial statements up to 1396, which have been legally audited. Then, using data envelopment analysis (DEA) method and in the conditions of "returns to fixed and variable scale", the efficiency score of the calculation exchanges, ranking and finally the strategies to improve the efficiency of inefficient exchanges have been extracted. The difference in the number of inefficient exchanges in the two scales indicates the proof of the theory of "scale inefficiency", the non-functioning of the exchanges at the optimal scale and the waste of resources by the exchanges. The weak position of the counties in the ranking table necessitates the selection of "heads of telecommunications of the counties" according to individual and professional competencies. Also, it was found that the lack of "competitive-motivational environment", "decision-making power" and "risk-taking" and the existence of "various organizational and legal restrictions" are important factors in the inefficiency of the exchanges.
Andersen, P., & Petersen, N. C. (1993), a procedure for ranking efficient units in data envelopment analysis. Management Science, 39 (10), 1261–1264. doi: 10.1287/mnsc.39.10.1261
Azamzadeh Shouraki, M., Khalilian, S., & Mortazavi, S. A. (2011), Selection Production Function and Estimate Important Coefficient of Energy in Agricultural Sector. Agricultural Economics and Development, 19 (76), 205-230, [In Persian].doi:10.30490/aead.2012.58753
Benicio, J., & Carlos Soares de Mello, J. (2015), Productivity Analysis and Variable Returns of Scale: DEA Efficiency Frontier Interpretation. Procedia Computer Science, 55, 341-349. doi: 10.1016/j.procs.2015.07.059
Debertin, D. L.(2012), Agricultural Production Economics. Macmillan Publishing Company, a division of Macmillan Inc, 1-428.
Fancello, G., Uccheddu, B., & Fadda, P. (2013), The performance of an urban road system using Data Envelope Analysis. WIT Transactions on The Built Environment, 130, 67-77. doi:10.2495/UT130061
Ghodsipour, S. H. (2019), Discussions in Multi-Criterion Decision Making: Hierarchical Analysis Process (AHP). Amirkabir University of Technology Publications, Tehran, 12-20, [In Persian].
Giménez, V., Thieme, C., Prior, D., & Tortosa-Ausina, E. (2017), An international comparison of educational systems: a temporal analysis in presence of bad outputs. Journal of Productivity Analysis, 47(1), 83–101. doi: 10.1007/s11123-017-0491-9
Gökşen, Y., Doğan, O., & Özkarabacak, B. (2015), A Data Envelopment Analysis Application for Measuring Efficiency of University Departments. Procedia Economics and Finance,19,226-237.doi:10.1016/S2212-5671(15)00024-6.
Halachmi, A. (2012), Mandated Performance Measurement:A help or a Hindrance? National Productivity review,18(2),59-67. doi:10.1002/npr.4040180211
Issazadeh Roshan, Y, & Khosravi,B.(2011), Ranking of the Telecommunication Company of provinces by Assessment of Data Envelopment Analysis (DEA). Journal of Operational Research and Its Applications (Applied Mathematics), 8 (3 (30)), 41-52, [In Persian]. http://jamlu.liau.ac.ir/article-1-314-fa.html
Keivan, E., Farshid Farzad, M., Radfar, R., & Sorkhabi, N. (2014). Measuring the Relative Efficiency of toll Switched exchanges (SC/PCs), data hierarchical classification method based on data envelopment analysis, Case Study: Provincial Exchanges of Telecommunication Infrastructure Company). Productivity Management,8(29),23-46,[In Persian]. dor:20.1001.1.27169979.1393.8.2.2.0
Khodabakhshi, M., Karami Khorramabadi, M., & Sameripour, A. (2015), An Andersen- Petersen (AP) Super-efficiency Model with Ordinal Data in the imprecise Data Envelopment Analysis (A Case Study: The Branch Offices of a Mobile Telecommunications Corporation in South Korea). Journal of Operational Research and its Applications (Applied Mathematics), 12 (2 (45)), 1-18, [In Persian]. http://jamlu.liau.ac.ir/article-1-1144-fa.html
Kumar, A., Debnath, R. M., Shankar, R., & Prabhuet, J. (2015), Analyzing customer preference and measuring relative efficiency in telecom sector: A hybrid fuzzy AHP/DEA study. Telematics and Informatics. 32 (3), 447-462. doi: 10.1016/j.tele.2014.10.003
Mehregan., M. R. (2016), Advanced Operations Research. Academic Book Publications, Tehran, 1-272. [In Persian].
Mirghafouri, S. H., Shafiee Rudposhti, M., & Nadafi, G. (2013), Evaluate financial performance with data envelopment analysis approach (case: provincial telecommunication companies). Management Research in Iran, 16 (4 (77)), 189-206, [In Persian]. dor:20.1001.1.2322200.1391.16.4.9.2
Mirghafouri, S. H., Shafiee Rudposhti, M., & Nadafi, G. (2011), Comparison and ranking of financial performance of provincial telecommunication companies with the collective model approach of data envelopment analysis and cross-efficiency method. Development Management Process, 24 (76), 103-127, [In Persian]. dor: 20.1001.1.17350719.1390.24.2.5.9
Mirghafouri, S. H., Shafiee Rudpashti, M., & Nadafi, G. (2011), Evaluating the efficiency of provincial telecommunication companies. Modern Economics and Commerce, 7 (25-26), 121-144, [In Persian].
Mohammadzadeh asl, N., Imam Verdi, G., & Sarir Afraz, M. (2010), Ranking of Indices of Urban Welfare in Different Regions of Tehran. Journal of Urban Planning and Research, 1 (1), 85-106. [In Persian]. dor:20.1001.1.22285229.1389.1.1.5.4
Cascio, W. F. (1995), Managing Human Resource, productivity, Quality of Work life, Profits, 4th ed, Mc Graw- Hill, Inc., 1995, p. 275.
Werther, W. B., TR Keith Davis, T. K. (1990), Human Resource and Personnel Management, Prentice-Hall, inc, P.14
Rafizadeh, A., Ronagh, Y. (2020), Performance management and evaluation: A scientific and applied approach, Farmanesh Publications, Tehran, 1-452.[In Persian].
Rahimi, G. (2006), Performance Evaluate and continuous improvement of the organization. Journal of Tadbir, 173, 41-44
Rentschler, J., Bleischwitz, R., & Flachenecker, F. (2018), On imperfect competition and market distortions: the causes of corporate under-investment in energy and material efficiency. International Economics and Economic Policy, 15 (1), 159-183. doi:10.1007/s10368-016-0370-2
Saaty, T. L., & Vargas, L. G. (1984), Comparison of eigenvalue, logarithmic least squares and least square methods in estimation ratios. Mathematical modeling, 5(5), 309-324.doi:10.1016/0270-0255(84)90008-3
Saaty, T. L. (2003), Decision making with the AHP: why is the principal eigenvector necessary. European journal of operation research, 145(1), 85-91.doi:10.1016/S0377-2217(02)00227-8
Tabarsa, G. A. (2000), Investigating and explaining the role of strategic requirements in choosing a performance appraisal model for government organizations. Proceedings of the Second Shahid Rajaee Festival Performance Evaluation of the Executive Bodies of the Country, Administrative and Employment Affairs Organization, Tehran. .[In Persian].
Taghizadeh, H., Pourabadollah Koich, M., & Aboutalebi, D. (2010), Privatization in East Azerbaijan Telecommunication Company and its role in reducing costs. Knowledge and Development, 16 (29), 201-218, [In Persian]. doi:10.22067/pm.v16i29.27201
Taheri, S. (2020), Productivity analysis in organizations (inclusive productivity management). Hastan: Fresh Air Publications, 28th Edition, Tehran, 1-390.[In Persian].
Van Ginkel, J. R. (2019), Significance Tests and Estimates for R2 for Multiple Regression in Multiply Imputed Datasets: A Cautionary Note on Earlier Findings, and Alternative Solutions. Multivariate Behavioral Research, 54: 4, 514-529. doi:10.1080/00273171.2018.1540967
Yarahmadi, M., & Karami Khorramabadi, M. (2014), Development of a super-efficiency model with imprecise data in the Imprecise Data Envelopment Analysis (Case study: A survey of 8 South Korean telecommunication centers). Sixth International Conference on Data Envelopment Analysis, Lahijan, [In Persian].
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Andersen, P., & Petersen, N. C. (1993), a procedure for ranking efficient units in data envelopment analysis. Management Science, 39 (10), 1261–1264. doi: 10.1287/mnsc.39.10.1261
Azamzadeh Shouraki, M., Khalilian, S., & Mortazavi, S. A. (2011), Selection Production Function and Estimate Important Coefficient of Energy in Agricultural Sector. Agricultural Economics and Development, 19 (76), 205-230, [In Persian].doi:10.30490/aead.2012.58753
Benicio, J., & Carlos Soares de Mello, J. (2015), Productivity Analysis and Variable Returns of Scale: DEA Efficiency Frontier Interpretation. Procedia Computer Science, 55, 341-349. doi: 10.1016/j.procs.2015.07.059
Debertin, D. L.(2012), Agricultural Production Economics. Macmillan Publishing Company, a division of Macmillan Inc, 1-428.
Fancello, G., Uccheddu, B., & Fadda, P. (2013), The performance of an urban road system using Data Envelope Analysis. WIT Transactions on The Built Environment, 130, 67-77. doi:10.2495/UT130061
Ghodsipour, S. H. (2019), Discussions in Multi-Criterion Decision Making: Hierarchical Analysis Process (AHP). Amirkabir University of Technology Publications, Tehran, 12-20, [In Persian].
Giménez, V., Thieme, C., Prior, D., & Tortosa-Ausina, E. (2017), An international comparison of educational systems: a temporal analysis in presence of bad outputs. Journal of Productivity Analysis, 47(1), 83–101. doi: 10.1007/s11123-017-0491-9
Gökşen, Y., Doğan, O., & Özkarabacak, B. (2015), A Data Envelopment Analysis Application for Measuring Efficiency of University Departments. Procedia Economics and Finance,19,226-237.doi:10.1016/S2212-5671(15)00024-6.
Halachmi, A. (2012), Mandated Performance Measurement:A help or a Hindrance? National Productivity review,18(2),59-67. doi:10.1002/npr.4040180211
Issazadeh Roshan, Y, & Khosravi,B.(2011), Ranking of the Telecommunication Company of provinces by Assessment of Data Envelopment Analysis (DEA). Journal of Operational Research and Its Applications (Applied Mathematics), 8 (3 (30)), 41-52, [In Persian]. http://jamlu.liau.ac.ir/article-1-314-fa.html
Keivan, E., Farshid Farzad, M., Radfar, R., & Sorkhabi, N. (2014). Measuring the Relative Efficiency of toll Switched exchanges (SC/PCs), data hierarchical classification method based on data envelopment analysis, Case Study: Provincial Exchanges of Telecommunication Infrastructure Company). Productivity Management,8(29),23-46,[In Persian]. dor:20.1001.1.27169979.1393.8.2.2.0
Khodabakhshi, M., Karami Khorramabadi, M., & Sameripour, A. (2015), An Andersen- Petersen (AP) Super-efficiency Model with Ordinal Data in the imprecise Data Envelopment Analysis (A Case Study: The Branch Offices of a Mobile Telecommunications Corporation in South Korea). Journal of Operational Research and its Applications (Applied Mathematics), 12 (2 (45)), 1-18, [In Persian]. http://jamlu.liau.ac.ir/article-1-1144-fa.html
Kumar, A., Debnath, R. M., Shankar, R., & Prabhuet, J. (2015), Analyzing customer preference and measuring relative efficiency in telecom sector: A hybrid fuzzy AHP/DEA study. Telematics and Informatics. 32 (3), 447-462. doi: 10.1016/j.tele.2014.10.003
Mehregan., M. R. (2016), Advanced Operations Research. Academic Book Publications, Tehran, 1-272. [In Persian].
Mirghafouri, S. H., Shafiee Rudposhti, M., & Nadafi, G. (2013), Evaluate financial performance with data envelopment analysis approach (case: provincial telecommunication companies). Management Research in Iran, 16 (4 (77)), 189-206, [In Persian]. dor:20.1001.1.2322200.1391.16.4.9.2
Mirghafouri, S. H., Shafiee Rudposhti, M., & Nadafi, G. (2011), Comparison and ranking of financial performance of provincial telecommunication companies with the collective model approach of data envelopment analysis and cross-efficiency method. Development Management Process, 24 (76), 103-127, [In Persian]. dor: 20.1001.1.17350719.1390.24.2.5.9
Mirghafouri, S. H., Shafiee Rudpashti, M., & Nadafi, G. (2011), Evaluating the efficiency of provincial telecommunication companies. Modern Economics and Commerce, 7 (25-26), 121-144, [In Persian].
Mohammadzadeh asl, N., Imam Verdi, G., & Sarir Afraz, M. (2010), Ranking of Indices of Urban Welfare in Different Regions of Tehran. Journal of Urban Planning and Research, 1 (1), 85-106. [In Persian]. dor:20.1001.1.22285229.1389.1.1.5.4
Cascio, W. F. (1995), Managing Human Resource, productivity, Quality of Work life, Profits, 4th ed, Mc Graw- Hill, Inc., 1995, p. 275.
Werther, W. B., TR Keith Davis, T. K. (1990), Human Resource and Personnel Management, Prentice-Hall, inc, P.14
Rafizadeh, A., Ronagh, Y. (2020), Performance management and evaluation: A scientific and applied approach, Farmanesh Publications, Tehran, 1-452.[In Persian].
Rahimi, G. (2006), Performance Evaluate and continuous improvement of the organization. Journal of Tadbir, 173, 41-44
Rentschler, J., Bleischwitz, R., & Flachenecker, F. (2018), On imperfect competition and market distortions: the causes of corporate under-investment in energy and material efficiency. International Economics and Economic Policy, 15 (1), 159-183. doi:10.1007/s10368-016-0370-2
Saaty, T. L., & Vargas, L. G. (1984), Comparison of eigenvalue, logarithmic least squares and least square methods in estimation ratios. Mathematical modeling, 5(5), 309-324.doi:10.1016/0270-0255(84)90008-3
Saaty, T. L. (2003), Decision making with the AHP: why is the principal eigenvector necessary. European journal of operation research, 145(1), 85-91.doi:10.1016/S0377-2217(02)00227-8
Tabarsa, G. A. (2000), Investigating and explaining the role of strategic requirements in choosing a performance appraisal model for government organizations. Proceedings of the Second Shahid Rajaee Festival Performance Evaluation of the Executive Bodies of the Country, Administrative and Employment Affairs Organization, Tehran. .[In Persian].
Taghizadeh, H., Pourabadollah Koich, M., & Aboutalebi, D. (2010), Privatization in East Azerbaijan Telecommunication Company and its role in reducing costs. Knowledge and Development, 16 (29), 201-218, [In Persian]. doi:10.22067/pm.v16i29.27201
Taheri, S. (2020), Productivity analysis in organizations (inclusive productivity management). Hastan: Fresh Air Publications, 28th Edition, Tehran, 1-390.[In Persian].
Van Ginkel, J. R. (2019), Significance Tests and Estimates for R2 for Multiple Regression in Multiply Imputed Datasets: A Cautionary Note on Earlier Findings, and Alternative Solutions. Multivariate Behavioral Research, 54: 4, 514-529. doi:10.1080/00273171.2018.1540967
Yarahmadi, M., & Karami Khorramabadi, M. (2014), Development of a super-efficiency model with imprecise data in the Imprecise Data Envelopment Analysis (Case study: A survey of 8 South Korean telecommunication centers). Sixth International Conference on Data Envelopment Analysis, Lahijan, [In Persian].
