Dominance-based measurement of productive and environmental performance for manufacturing

Abstract

The concept of efficiency measurement is based on the definition of a frontier that envelopes observed production plans. The effect of pollution prevention and environmental compliance on productive efficiency is typically studied by considering pollution as not freely disposable (i.e., there is a cost incurred to dispose of pollution) or by assigning shadow prices to pollution outputs. However, the frontier along with the required technological assumptions needed for its definition may be replaced with the concept of pairwise dominance. With data from a manufacturing facility, the use of pairwise dominance allows one to consider a wide spectrum of inputs and outputs. Furthermore, the approach of benchmark correspondence is augmented so as to consider environmental performance. Pairwise dominance is applied to segregate production plans into sets according to their relative environmental and productive efficiency performance. These sets in conjunction with appropriately identified reference production plans are used to define distance-based measures of efficiency and environmental performance. Pollution prevention activities of a printed circuit board manufacturing facility motivated the development of the reported analytical framework.