Abstract
Measurement of a production unit-performance is crucial in determining whether it has achieved its objectives or not, and it generates a phase of management process that consists of feedback motivation phases. The purpose of this paper is to analyze the growth potentials of five production machines in a Jordanian company for plastic industries by employing the non-parametric Malmquist productivity index (MPI) over the period from February to July 2014 in both day and night shifts. The productivity change is decomposed into technical efficiency change (TEC) and technological change (TC). Inefficiency values are observed in each period. The percentage of input utilization is determined in all periods. Then, the Malmquist productivity index (MPI) values are calculated for all periods. Finally, comparisons of TEC, TC and MPI are conducted among the five machines and between the day and night shifts for each machine. The MPI results indicate that the needs for internal training, effective operating procedures, and enhancing quality procedures are required to increase the technical efficiency. On the other hand, figuring out more efficient ways of making existing products allowing output to grow at a faster rate than economic inputs, like using new technologies, will increase technological change. In conclusions, Malmquist model analysis shall provide valuable reference information to management when evaluating the progress in the performances of production machines in plastic industry.
Highlights
Performance measurement of a production unit is crucial in determining whether it has achieved its objectives orHow to cite this paper: Al-Refaie, A., Al-Tahat, M.D. and Najdawi, R. (2015) Using Malmquist Index Approach to Measure Productivity Change of a Jordanian Company for Plastic Industries
This result indicates that the dispersion is significant and there is a trend in technological change (TC), technical efficiency change (TEC), and Malmquist productivity index (MPI)
M2 has a geometric average MPI decrease of 2.36% over the same period, this productivity decrease was entirely attributed to technological change regress of 2.36%, while the mean technical efficiency change held constant
Summary
Performance measurement of a production unit is crucial in determining whether it has achieved its objectives orHow to cite this paper: Al-Refaie, A., Al-Tahat, M.D. and Najdawi, R. (2015) Using Malmquist Index Approach to Measure Productivity Change of a Jordanian Company for Plastic Industries. Malmquist productivity index (MPI) proposed is a management tool used to evaluate the productivity progress for multi-inputs and multi-outputs [8]-[12]. The MPI represents Total Factor Productivity (TFP) growth of a Decision Making Unit (DMU) and reflects the increase or decrease in efficiency with progress or regress of the frontier technology over time under multiple inputs and multiple outputs framework [13]-[15]. The framework employed in Malmquist can be illustrated, where a production frontier representing the efficient level of output (y) that can be produced from a given level of input (x) is constructed. If the inefficiency is ignored, the productivity growth over time will be unable to distinguish between improvements that derive from a DMU catching up to its own frontier, or those that result from the frontier itself shifting up over time
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