Analyzing the Operations Strategies of Manufacturing Firms Using a Hybrid Grey DEA approach – A case of Fars Cement Companies in Iran

Document Type: Research Paper


Department of Industrial Engineering,College of Engineering,Shiraz branch, Islamic Azad University, Shiraz , Iran


In competitive markets, the operations strategies of companies are normally formulated based on their competitive advantages. An effective operations strategy should maintain and improve competitive advantages based on the capabilities of the corporate operations resources. Considering the market requirements and the operational performance of the rivals is the key for success and survival of a company in the competition. Therefore, recognizing where a company stands in comparison with its rivals and adopting the appropriate operations strategy plays vital roles in the success of companies. This paper proposes a method for comparing and ranking operations strategies of companies based on the concept of efficient frontier using data envelopment analysis (DEA) in grey environment. In the aforementioned method, DEA is used to evaluate the efficiency of operations strategies of manufacturing firms. Also, grey theory is used to support the uncertainty of the experts’ opinions regarding the inputs and outputs of the DEA model. Then the respective units are ranked, and analyses are performed. The proposed approach is applied for the entire nine cement factories of Fars Province in Iran, and the units are ranked, respective analyses are presented regarding the efficient and inefficient units.


Main Subjects

Aji, Y., & Hariga, M. (2013). An AHP-DEA-based vendor selection approach for an online trading platform. International Journal of Applied Decision Sciences, Vol. 6(1), pp. 66-82.

Alparslan Gok, S. Z., Palanci, O., & Olgun, M. O. (2014). Alternative Axiomatic Characterizations of the Grey Shapley Value. International Journal of Supply and Operations Management, Vol. 1(1), pp. 69-80.

Banker, R. D., Charnes, A., & Cooper, W. W. (1984). Some models for estimating technical and scale inefficiencies in data envelopment analysis.Management science, Vol. 30(9), pp. 1078-1092.

Barros, C. P., & Peypoch, N. (2009). An evaluation of European airlines’ operational performance. International Journal of Production Economics, Vol. 122(2), pp. 525-533.  

Beckman, S. L., & Rosenfield, D. B. (2008). Operations strategy: competing in the 21st century. McGraw-Hill/Irwin.

Boyer, K. K., & Lewis, M. W. (2002). Competitive priorities: Investigating the need for trade-offs in operations strategy. Production and operations management, Vol. 11(1), pp. 9-20. 

Braglia, M., Zanoni, S., & Zavanella, L. (2003). Measuring and benchmarking productive systems performances using DEA: an industrial case. Production Planning & Control, Vol. 14(6), pp. 542-554. 

Brown, S., Bessant, J. R., & Lamming, R. (2013). Strategic operations management. Routledge.

Bulak, M. E., & Turkyilmaz, A. (2014). Performance assessment of manufacturing SMEs: a frontier approach. Industrial Management & Data Systems, Vol. 114(5), pp. 797-816.

Chambers, S., Johnston, R., & Slack, N. (2004). Operations Management. Pearson Education UK.

Charnes, A., Cooper, W. W., & Rhodes, E. (1978). Measuring the efficiency of decision making units. European journal of operational research, Vol. 2(6), pp. 429-444. 

Chen, Y. S., & Chen, B. Y. (2011). Applying DEA, MPI, and grey model to explore the operation performance of the Taiwanese wafer fabrication industry. Technological forecasting and social change, Vol. 78(3), pp. 536-546. 

Coelli, T. J., Rao, D. S. P., O'Donnell, C. J., & Battese, G. E. (2005). An introduction to efficiency and productivity analysis. Springer. 

Cook, W. D., Tone, K., & Zhu, J. (2014). Data envelopment analysis: Prior to choosing a model. Omega, Vol. 44, pp. 1-4. 

Deng , J . L ., (1982). Control problems of Grey Systems. Systems and Control Letters, Vol.  5(2), pp. 288-294.

Düzakın, E., & Düzakın, H. (2007). Measuring the performance of manufacturing firms with super slacks based model of data envelopment analysis: An application of 500 major industrial enterprises in Turkey. European Journal of Operational Research, Vol. 182(3), pp. 1412-1432.

Gardner, R. (2004). The process-focused organization: a transition strategy for success. ASQ Quality Press. 

Hayes, R. H., & Wheelwright, S. C. (1984). Restoring our competitive edge: competing through manufacturing. 

Hayes, R.H. and Wheelwright, S.C. (1985), “Competing through Manufacturing”, Harvard Business Review, Vol. 99-109.

Iribarren, D., Martín-Gamboa, M., & Dufour, J. (2013). Environmental benchmarking of wind farms according to their operational performance. Energy, Vol. 61, pp. 589-597.

Jahanshahloo, G., Lotfi, F. H., Rostamy-Malkhalifeh, M., Maddahi, R., & Ebrahimnejad, A. (2013). Ranking non-extreme efficient units based on super efficiency method in the presence of undesirable outputs: a DEA approach.International Journal of Applied Decision Sciences, Vol. 6(1), pp. 83-95. 

Kaviani, M., Abbasi, M., Yusefi, M., & Zareinejad, M. (2014). Prioritizing operation strategies of companies using fuzzy AHP and importance-performance matrix. Decision Science Letters, Vol. 3(3), pp. 353-358. 

Korhonen, P. (2002). Searching the efficient frontier in data envelopment analysis. In Aiding Decisions with Multiple Criteria (pp. 543-558). Springer US. 

Le, T. N., Huang, Y. F., & Wang, C. N. (2014, June). The Selection of Strategic Alliance Partner in Vietnam Garment Industry Using Grey Theory and DEA. InComputer, Consumer and Control (IS3C), 2014 International Symposium on(pp. 673-676). IEEE.

Li, G. D., Yamaguchi, D., & Nagai, M. (2007). A grey-based decision-making approach to the supplier selection problem. Mathematical and computer modelling, Vol. 46(3), pp. 573-581.

LI, Q., & LIN, Y. (2014). Review paper: A Briefing to Grey Systems Theory.Journal of Systems Science and Information, Vol. 2(2), pp. 178-192. 

Liedtka, J. M. (1998). Strategic thinking: can it be taught?. Long range planning, Vol. 31(1), pp. 120-129.

Liu, C. H., Lin, S. J., & Lewis, C. (2010). Evaluation of thermal power plant operational performance in Taiwan by data envelopment analysis. Energy policy, Vol. 38(2), pp. 1049-1058. 

Liu, S., Fang, Z., & Forrest, J. (2010, October). On algorithm rules of interval grey numbers based on the “Kernel” and the degree of greyness of grey numbers. In Systems Man and Cybernetics (SMC), 2010 IEEE International Conference on (pp. 756-760). IEEE. 

Meenakumari, R., Kamaraj, N., & Thakur, T. (2009). Measurement of relative operational efficiency of SOEUs in India using data envelopment analysis. International Journal of Applied Decision Sciences, Vol. 2(1), pp. 87-104. 

Memon, M. A., & Tahir, I. M.(2012), Company Operation Performance Using DEA and Performance Matrix: Evidence from Pakistan. 

Nath, P., Nachiappan, S., & Ramanathan, R. (2010). The impact of marketing capability, operations capability and diversification strategy on performance: a resource-based view. Industrial Marketing Management, Vol. 39(2), pp. 317-329. 

Rahimnia, F., Moghadasian, M., & Mashreghi, E. (2011). Application of grey theory approach to evaluation of organizational vision. Grey Systems: Theory and Application, Vol. 1(1), pp. 33-46. 

Sarmiento, R., Byrne, M., Contreras, L. R., & Rich, N. (2007). Delivery reliability, manufacturing capabilities and new models of manufacturing efficiency. Journal of Manufacturing Technology Management, Vol. 18(4), pp. 367-386.

Seiford, L. M., & Thrall, R. M. (1990). Recent developments in DEA: the mathematical programming approach to frontier analysis. Journal of econometrics, Vol. 46(1).

Shuai, J. J., & Wu, W. W. (2011). Evaluating the influence of E-marketing on hotel performance by DEA and grey entropy. Expert systems with applications, Vol. 38(7), pp. 8763-8769. 

Skinner, W. (1969). Manufacturing-missing link in corporate strategy (pp. 136-145). Harvard Business Review. 

Slack, N., & Lewis, M. (2008). Operations Strategy. Harlow: Prentice Hall Financial.

Slack, N., & Lewis, M. (2011). Operating Strategy.

Slack, N., Chambers, S., Johnston, R., & Betts, A. (2006). Operations and Process Management: Principles and Practice for Strategic Impact. Pearson Education.

Sun, C. C. (2011). Evaluating and benchmarking productive performances of six industries in Taiwan Hsin Chu Industrial Science Park. Expert Systems with Applications, Vol. 38(3), pp. 2195-2205.

Talluri, S., Vickery, S. K., & Droge, C. L. (2003). Transmuting performance on manufacturing dimensions into business performance: an exploratory analysis of efficiency using DEA. International Journal of Production Research, Vol. 41(10), pp. 2107-2123. 

Wang, Q., Wang, S., & Wang, X. (2009, November). Research on total factor energy efficiency in China based on super efficiency grey DEA model. In Grey Systems and Intelligent Services, 2009. GSIS 2009. IEEE International Conference on (pp. 1542-1547). IEEE. 

Wang, S., Ma, Q., & Guan, Z. (2007, November). Measuring hospital efficiency in China using grey relational analysis and data envelopment analysis. In Grey Systems and Intelligent Services, 2007. GSIS 2007. IEEE International Conference on (pp. 135-139). IEEE. 

Wang, J., & Liu, S. (2012). Efficiency measures in DEA with grey interval data under the hypotheses of data consistency. Grey Systems: Theory and Application, Vol. 2(1), pp. 63-69.

Xia, D. C., Li, B. T., Wang, J. P., & Shi, G. P. (2014, August). Research on General DEA Model Based on the Grey Linear Programming. In Applied Mechanics and Materials, Vol. 577, pp.828-831.

Xu,H. Zhou, SH. (2013). A grey data envelopment analysis model. Journal of Theoretical and Applied Information Technology, Vol. 48(3), pp. 1992-8645. 

Yang, Y. S. (1998). Data Envelopment Analysis (DEA) Model with Interval Gray Numbers. International journal of information and management sciences, Vol. 9, pp. 11-24. 

Zareinejad, M., Kaviani, M., Esfahani, M., & Masoule, F. (2014). Performance evaluation of services   quality in higher education institutions using modified SERVQUAL approach with grey analytic hierarchy process (G-AHP) and multilevel grey evaluation. Decision Science Letters, Vol. 3(2), pp. 143-156.