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An Evaluation Of Cross-Efficiency Methods: With An Application To Warehouse Performance

Bert Balk, M.B.M. René de Koster, Christian Kaps, José de Zofío

Applied Mathematics and Computation, 2021

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Abstract

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, due to the existence of decreasing returns to scale in the industry. From the methodological perspective, based on a multidimensional metric considering ranking capability, ease of implementation, and robustness, we conclude to the superiority of the classic Sexton et al. (1986) method over recently proposed, more sophisticated methods.