A DEA/AHP Approach to Efficiency Investigation for Taiwan's Retailing Industry via Financial Data Analysis

A combined data analysis technique of analytical hierarchical process (AHP) and data envelopment analysis (DEA) is employed in this paper to examine performance and to rank importance of inputs/outputs for Taiwan's retailing industry. Financial data was collected from 204 retailing companies for the year of 2003 to 2007. The input data includes current assets, the number of employees, inventory investment, and promotion expenses while outputs the sales and gross margin. Efficiency is derived from the relationships between inputs and outputs to disclose the performance for retailing industry. There were remarkable results showing that (1) the overall efficiency for the retailing industry is 0.4949, indicating deficient performance, and (2) the important ranks for input variables are the number of employees and inventory while the output is the gross margin for the past five years, implying that retailers should change their focus from these variables to others due to the deficiency.