EFFCIENCY ANALYSIS: AN INSIGHT INTO DEA COST MODEL AND ITS APPLICATION

This paper presents a mathematical programming approach, known as Data Envelopment Analysis(DEA) to provide a relative cost efficiency estimate of 180 maize farmers. DEA with multiple number of inputs and outputs is a non-parametric efficiency evaluation method and it is widely applied by researchers in efficiency evaluations of various sectors. Farming is not only about the production hence emphasis is given on input oriented cost minimization technique. Six inputs and one output were considered for this study. Cost efficiency of decision making units(DMU) by DEA is carried out through linear programming methods and it compares the efficiencies among different units. DMUs that lie on the frontier curve are efficient in selecting the optimum input and producing the desired amount of output at minimum cost. The result shows that only 40% of the samples were on the frontier line.