Evaluation of the economic efficiency of vegetable oil supply chains

Abstract

ABSTRACTPerformance evaluation of a vegetable oil supply chain, which includes the production of oilseeds, extraction, and refining of crude oil, is a vital part of developing effective supply chain management in Iran. In this study, we considered network data envelopment analysis (NDEA) models which link three-level supply chain for vegetable oil to measure the technical, allocative and economic efficiencies oil supply chain in Iran for 2012. The results indicate that in terms of oil seed production, large scale farms have more technical, economic and allocation efficiencies. Further results indicate that firms possessing a large share in total crude oil production are technically more efficient, because of economies of scale. The result show technical efficiency had less variance among the oil companies due to the low variations of ratios of the crude oil extracted to oilseed and also the ratio of refined oil to crude oil. However, allocative efficiency and economic efficiency of units have a greater variation. Increase in productivity of the oilseed production as well as increase in the technical efficiency and of production cost caused gradual promotion economical supply chain efficiency. Several implications can be drawn in order to assist policy-makers to improve the performance of vegetable oil supply chain in Iran; these include designing encouraging and supporting mechanisms, increasing the production attractiveness of the first and second levels of the supply chain, and also logistic integrated planning using mathematical programming techniques.