Application of Malmquist Productivity Index in Integrated Units of Power Plant

Application of Malmquist Productivity Index in Integrated Units of Power Plant

Elahe Shariatmadari Serkani (Islamic Azad University, Iran), Seyed Esmaeil Najafi (Islamic Azad University, Iran) and Arash Nejadi (Tehran Polytechnic, Iran)
Copyright: © 2017 |Pages: 55
DOI: 10.4018/978-1-5225-0596-9.ch003
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Abstract

The Malmquist Productivity Index (MPI) evaluates the productivity change of a Decision Making Unit (DMU) between two time periods. DEA considers performance analysis at a given point of time. Classic Malmquist Productivity Index shows regress and progress of a DMU in different periods with efficiency and technology variations without considering the present value of money. In this chapter Application of Malmquist productivity index in integrated units of power plant is discussed. Four units of one of the power plants are assessed & the data of its five successive years are supplied. Also application of Malmquist productivity index (precise data) in Safa Rolling and pipe plants for the time period of 2007 – 2012 is studied.
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Introduction

The Malmquist index (MI) is one of the most frequently used techniques to measure productivity changes overtime. The concept of Malmquist productivity index was first introduced by Malmquist (1953), and has further been studied and developed in the non-parametric framework by several authors. Malmquist productivity index (MPI) is usually to measure the productivity growth over the time and is product of efficiency change and technological change. The main disadvantage of the Malmquist index is the necessity to compute the distance function. The Malmquist index can be further decomposed by disaggregating changes in technical efficiency into changes in scale efficiency and input congestion (Fare et al.,1994).

Farell (1957) determined a suitable method to evaluate experimental production function for several inputs and outputs with using linear programming technique and Data Envelopment Analysis (DEA). By applying DEA, the best efficiency frontier will be calculated with a set of DMUs and omitting of any priority for inputs and outputs. The DMUs of efficiency frontier are the units with the maximum output and/or the minimum input levels. Using the efficient units and efficiency frontier, is the analysis of other inefficiency units possible.

Fare in the 1992-1994 developed Malmquist productivity index based on DEA in order to measure productivity by time shift. Malmquist index was used as a quantitative index for using in the analysis of input consumption in 1953.

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