Performance Evaluation of Rare Earth Enterprise Based on DEA

Transcription

1 International Conference on Econoic, Manageent, Law and Education (EMLE 2015) Perforance Evaluation of Rare Earth Enterprie Baed on DEA Jianzhong Li Yuefeng Ma School of Econoic and Manageent Baotou Teacher College Baotou, P.R. China E-ail: School of Econoic and Manageent Inner Mongolia Univerity of Science and Technology Baotou, P.R. China E-ail: Abtract Baed on CCR odel of Data Envelopent Analyi (DEA), thi paper ake an evaluation on the operating perforance of 14 Rare Earth lited copanie in The evaluation include coprehenive efficiency evaluation, cale efficiency evaluation and proection eaure evaluation. Reult how that the overall perforance of China' Rare Earth lited copanie i not ideal. The average perforance value i only , which i ainly due to the cale inefficiency. According to the ineffective deciion aking unit for DEA, thi paper give out the aduted target value of input indexe and output indexe. tandard to tudy the enterprie internal data and etiate the anageent proce and reult of the enterprie, which can be turned into the proble of tudying the iniu input and the axiu output. Conidering that DEA i an effective quantitative analyi ethod for enterprie icroeconoic foundation, thi paper applie thi ethod to evaluate buine perforance of China Rare Earth lited copanie and analyze the technical efficiency and cale efficiency, o a to put forward a erie of effective eaure to ake it reach DEA effective and oe policy uggetion to proote the coprehenive developent of rare earth enterprie. Keyword DEA; Enterprie Evaluation; Perforance; Rare Earth II. I. INTRODUCTION Data Envelopent Analyi ethod (DEA Model for hort), a typical kind of non-paraetric ethod, i a pecial tool to evaluate relative effectivene of ob perforance with the ae type organization (or ite) baed on linear prograing. It iproved variou quetion of paraetric ethod, uch a the auption of function for in advance and the effectivene of paraeter etiate, which doen't need to et the pecific function for for production frontier, but to deterine production frontier with a large nuber of practical production point by linear prograing [2]. Baed on operational reearch theory, it i gradually fored the ethod ainly depending on linear prograing technology and often ued for econoic quantitative analyi, which i a kind of effective ethod applied to unit efficiency evaluation of ultiple input ultiple output. In the real econoic activity, not all the input-output relation can be deterined out functional relation, while DEA odel provide the tool to evaluate input-output efficiency under the uncertain condition of functional relation. Rare earth, which i one of the ot abundant trategic reource in China, i one eential raw aterial in plenty of high-tech indutrie and one iportant bai aterial in Inforation Technology, Biotechnology, Energy Technology and oe high-tech area a well a the National Defene contruction. Meanwhile, rare earth play an iportant role in the recontruction of oe traditional indutrie, uch a agriculture, cheical indutry, building aterial and etc. [1] The latet tatitic of United State Geological Survey (USGS) how that China indutrial reerve of rare earth account for 30.68% of the world', while the poible ore account for 80%, upplying ore than 95% of the world conuption, which gain China a worthy nae of Rare Earth Power. Therefore, it i ignificant to tudy the iproveent of operating perforance of China Rare Earth enterprie and the acceleration of developent of China' Rare Earth indutry under the background of econoic globalization. It ake ene for the iproveent of China' Rare Earth enterprie copetitivene a well a the teady developent of the whole national econoy. At preent, the ot repreentative claical DEA odel contain CCR odel[3], BC2 odel[4], FG odel[5], ST odel[6], C2GS2 additive odel[7], C2W odel[8]with infinitely any DMU ei-infinite prograing a well a Coprehenive DEA odel[9]and etc., all of which take advantage of DEA ethod to evaluate the relative effectivene of Dieel Multiple Unit (DMU)[10]. Thi paper adopt CCR odel to evaluate the "validity" of Rare Earth enterprie. Perforance evaluation i the ulti-attribute evaluation on how an organization or individual obtain ore output reult with a relatively fewer input reource, which uually utilize the "input-output ratio of "cot benefit analyi" to conider the input attribute and output attribute when the influence on target i negative and poitive repectively. The proble of an enterprie perforance evaluation i to apply cientific ethod and adopt pecific indicator and The author - Publihed by Atlanti Pre DEA ANALYTICAL PRINCIPLE 224

2 CCR odel uppoe the contant Return to Scale, which ean that the output obtained fro each unit input i contant and would not change with the cale. The baic idea of CCR odel i to deterine the effective production frontier through the analyi of aple input and output data, and then confir whether each DMU i DEA effective according to the ditance condition of each DMU and production frontier. Suppoe there are n deciion unit (indicated with DMU ), and each deciion unit ha type of "Input" a well a type of "Output" repectively indicate the conuption of xi reource and production reult of the unit. i the input of the th deciion aking unit to the ith yr type of input, i the output of the th deciion aking unit to the ith type of output, vi i the weight to the ith type of input and ur i the weight uy r r r1 h vx i i to the rth type of output. i1 i defined a the enterprie invetent efficiency, and the th deciion unit i h 1 relatively effective when. h All the value of are liited no ore than 1, that i MAXh 1. If hk 1, the kth enterprie ha the highet productivity relative to other enterprie, or thi production h 1 yte i relatively effective. If k, the production efficiency of the kth enterprie need to be iproved relative to other enterprie, or thi production yte i ineffective. According to the above auption, following fractional prograing i etablihed: MAX uy r r1 vx i i1 r0 i0 (1) uy r r0 r1 1aa 1,2,, n.t. vx i i0 i1 T v 0 aav v1, v2,, v T u 0 aau u1, u2,, u To witch the above fractional prograing into linear prograing through the Charne-Cooper Tranforation and then to ake dual will obtain the following prograing for: in (2) n x x0 1.t. (3) n y y0 1 0, 0, 0 The value of calculated by the above odel indicate for the operating perforance value of Rare Earth enterprie, in which (1) if 1 DUM, 0 i weak DEA effective (overall); (2) if 1, 0 and 0 DUM, 0 i DEA effective (overall); (3) if 1 DUM, 0 i DEA ineffective. The value of i the urplu variable of correponding index, that i the changeable value. (4) If there exit which can ake 1 etablih, DUM 0 i invariant econoie of cale; if 1 doen t exit to ake 1 etablih and, DUM 0 1 i increaing econoie of cale; if, DUM 0 i decreaing econoie of cale. III. CASE ANALYSIS A. Selection of Deciion Unit Thi paper take doetic Rare Earth lited copany a the reearch obect, in which Rare Earth lited copany i engaged in the production and buine operation relevant to rare earth. According to The Indutry Claification Guide of Lited Copany contituted by China Securitie Regulatory Coiion on April 3, 2001, lited copanie can be claified a Rare Earth indutry only when it operation revenue proportion engaging in Rare Earth i greater than or equal to 50%, or when it operation revenue proportion engaging in Rare Earth i 30% higher than any other buine incoe if it operation revenue of any indutrie i greater than or equal to 50%. According to the above principle, thi paper elect 14 lited enterprie engaged in the exploitation, proce and application of Rare Earth reource a evaluation obect. B. Selection of Evaluation Index Conidering the reearch practice fro different cholar, the elf characteritic of the Rare Earth Indutry a well a the cientificity and availability of the data, the input indexe ainly include Total Aet, Operating Cot and Staff Nuber, while the output indexe include Operation Revenue and Net Margin[11, 12, 13], in which all the data are derived fro 2011 annual financial tateent of lited copany. Aong input indexe, Total Aet refer to all the aet able to bring econoic interet that one econoic entity ha or control. It i one econoic cale factor for a lited Rare Earth copany and the ot table foundation for econoic benefit, which can reflect the reource allocation optiizing condition of the lited Rare Earth copany. Operating Cot i the input relative to the Operation Revenue, conidering fro internal anageent operational efficiency of the lited Rare Earth 225

3 copany. Staff Nuber i the creator of the econoic benefit of lited Rare Earth copany and the ot dynaic the ource able to create ore value. The final purpoe for the copany production and anageent i to ake profit, o in output indexe, Operation Revenue refer to the buine incoe obtained fro the engageent in oe ain production and operating activitie, which can reflect the ize of the copany' profit ability. Net Margin, a the output index, reflect the overall profit tatu of a. The input-output data can be een in Table I. TABLE I. THE INPUT-OUTPUT DATA OF LISTED RARE EARTH COMPANIES DUM No. DUM Nae Total Aet Operating Cot Staff Nuber Operation Revenue 1 Shenzhen Zhongin Lingnan Nonfeet (NONFEMET) Advanced Technology & Material (AT&M) Baogang Rare Earth Hunan Chenzhou Mining Group Jiangxi Copper Corporation (JCC) Guangdong Riing Nonferrou Metal Group Guangdong Fenghua Advanced Technology Taiyuan Twin-Tower Aluinu Oxide Minetal Developent Xiaen Tungten Zhong Ke San Huan Aluinu Corporation of China (CHINALCO) China Nonferrou Metal Indutry Foreign Engineering and Contruction (NFC) Hengdian Group DMEGC C. The Reckoning baed on CCR odel Net Margin DUM No. TABLE II. The DEA Evaluation Value of THE PERFORMANCE EVALUATION RECKONING OF RARE EARTH ENTERPRISE Seqencing Averafe Value

4 IV. RESULT ANALYSIS A. Coprehenive Efficiency[14] Analyi According to the reckoning of TABLE II, the average efficiency of 14 lited Rare Earth copanie i , and there i 18.43%upide potential. Only the Coprehenive Efficiency of Baogang Rare Earth and Minetal Developent arrive trong DEA effective, the ideal tate, which i "to obtain the axiu output with exiting input" and "to ake the iniu input with exiting output", while the ret of the 12 enterprie are invalid in CCR odel. There are only two out of 14 elected lited Rare Earth copanie in the coprehenive efficiency effective frontier, accounted for only 14.2% of the total aount. The reckoning how that the coprehenive efficiency of lited Rare Earth copanie i lower, and the elected enterprie have great difference in coprehenive efficiency, in which the coprehenive efficiency of Guangdong Fenghua Advanced Technology i the iniu of only B. Scale Efficiency Analyi According to the value of, aong thoe DEA ineffective enterprie, Scale Efficiency of JCC and CHINALCO are decreaing, that i to ay the increaing rate of output i le than the input. The Scale Efficiency of other ret 10 enterprie are increaing, that i to ay the increaing rate of output i greater than the input. A far a the elected deciion unit i concerned, 85.7% of the enterprie are cale inefficient. C. Proection Analyi Through calculating the indexe proection value a well a the difference between the actual value and proection value of input and output of each DEA ineffective copany, the ineffective copanie can obtain the capable econoical input and the output target would be achieved after iproveent. For the DEA ineffective DMU, it can be known fro the x DEA theory that 0 x0 y and 0 y0 can be ued to adut the DEA ineffective DMU into effective [15]. According to above analyi and cobining with TABLE II, the DEA ineffective DMU can be aduted into effective through the adutent of each index, which can be een in Table III. There exit exce DEA ineffective copanie aong the elected copanie and inufficient output. Take DUM1, Shenzhen Zhongin Lingnan Nonfeet (NONFEMET), a an exaple, the priary Total Aet wa illion RMB, the Operating Cot wa illion RMB and the Staff Nuber wa 9912, which wa a redundant input. After the adutent, the Total Aet turn into illion RMB, the Operating Cot i illion RMB and the Staff Nuber reduce to 6567, fro which the Net Margin changed fro to illion RMB. Thi adutent can ake the DEA ineffective DUM1 DEA effective. TABLE III. D U M N o. Total Aet THE PROJECTION RECKONING ADJUSTMENT OF EACH DEA INEFFECTIVE INDEXES Operating Cot Staff Nu ber Operation Revenue Net Margin V. CONCLUSION Reult how that the overall efficiency of China lited Rare Earth copanie i not high, for which the average coprehenive efficiency i ut , and there exit ignificant difference in efficiency. Fro the perpective of cale efficiency, China lited Rare Earth enterprie perfor not well, aong which cale benefit of ot copanie are increaing. For the DEA ineffective enterprie, thi paper calculate out the target of reducing input redundancy and increaing output. If thoe enterprie iprove anageent tandard and control the appropriate developent cale, they would becoe DEA effective. REFERENCES [1] Li-ying Zhang, Sheng-lian Li, Statu quo, proble and propect of coprehenive perforance evaluation of Rare Earth indutry chain (in Chinee), Eat China Econoic Manageent, vol. 26, no. 1, pp , [2] Dong-you Li, Zhan-xin Ma, A odified odel of DEA and it application in lited Copanie of logitic (in Chinee), Journal of Beiing Jiaotong Univerity, vol. 11, no. 2, pp , [3] A.Charne,W.W.Cooper,E.Rhode, Meauring the efficiency of deciion aking unit, European Journal of Operational Reearch, no. 2, pp , [4] R.D. Banker, A. Charne, W.W. Cooper, Soe odel for etiating technical and cale inefficiencie in data envelopent analyi, Manageent Science, no. 30, pp , [5] R. Fare, S. Grokopf, A nonparaetric cot approach to cale efficiency, Journal of Econoic, vol. 87, pp , [6] L.M. Seiford, R.M. Thrall, Recent developent in DEA, Journal of Econoic, vol. 46, pp. 7-38, [7] A. Charne, W.W. Cooper, B Golany, Foundation of data envelopent analyi for Pareto-Koop-an efficient epirical production function, Journal of Econoetric, vol. 30, no. 1, pp ,

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