The Cost Efficiency Analysis of JeollaNamdo Food Industry

전라남도 식품업체의 비용 효율성 분석

  • Qing, Cheng Lin (College of Business Administration, Honam University) ;
  • Na, JuMong (College of Economic Administration, Chonnam University) ;
  • Chang, Seog Ju (College of Business Administration, Honam University) ;
  • Im, Chang Uk (College of Business Administration, Honam University)
  • Received : 2015.09.08
  • Accepted : 2015.11.23
  • Published : 2015.12.31


Purpose: The purpose of this study is to analyze the cost efficiency of food industry in JeollaNamdo. And this study is focused on the correlation between the economic efficiency of food industry and its cost efficiency, based on the analysis of 372 food companies' data in JeollaNamdo in 2012. Methods: DEA cost minimization is the measurement of the cost efficiency of JeollaNamdo food industry in 2012. In this study, the CCR and BBC models have been employed to analyze the decomposing cost efficiency-technical efficiency, allocative efficiency, and scale efficiency respectively. And the Spearman rank correlation and Wilcoxon signed rank test also have been employed to check the correlation and difference between the ranking orders based on the efficiency scores respectively. Results: For the CCR model, mean cost efficiency was found to be 0.084(0.54 for allocative efficiency and 0.19 for technical efficiency). For the BCC model, mean cost efficiency was found to be 0.252(0.453 for allocative efficiency and 0.564 for technical efficiency). Average scale efficiency was found to be 0.38. In analyzing the results, this study argues that the optimal way to improve cost efficiency is by reducing inputs proportionally and changing their combination. Conclusion: The efficiency scores of the two models show high correlation, whereas, the differences between them are also found to be significant. Hence, it should be cautious to select a suitable model when we do the research.


  1. An, Sangdon, Gang, Byeonggyu, and An, Jinyong. 2009. "An Analysis of the Managerial Efficiency of Processed Foods Business at Local Primary Agricultural Cooperatives Using the DEA Model." Korean Society for Cooperative Studies 26(2):43-66.
  2. Chang, Hyundong. 2007. "Analysis on Management Efficiency of Lily Farms Using DEA" Chongnam University Press.
  3. Cho, Geon, and Jung, Kyungho. 2011. "A Study on Evaluating the Efficiency of the Photonics Industry in Gwangju Using a DEA Model." J Korean Soc Qual Manag 39(2):244-255.
  4. Coelli, T. J., D. S. Prasada Rao, Christopher J. O. Donnell, and G. E. Battese. 2005. An Introduction to Efficiency and Productivity Analysis. NY: The Free Press.
  5. Fare, R., and S. Grosskopf. 2000. Reference Guide to On Front. Sweden: The Free Press.
  6. Goh, Jongtea, and Lee, Hyangmi. 2011. "A Study on the Management Efficiency of Kangwon Paprika Export Farms Using DEA." Korean Food Marketing Association 28(3):1-23.
  7. Jang, Dongheon, and Na Sanggyun. 2012. "An Analysis for Relative Efficiency of Food Service Industry and the DEA." Korean Industrial Economic Association 25(2):1589-1603.
  8. Jung, Sukwan, and Kang, Sangmok. 2013. "Efficiency Analysis of Public Library by DEA Cost Minimization." The Journal of Cultural Policy 27(2):145-63.
  9. Kim, Daehwan, Moon, Jongbeom, Yoo, Wangjin, and Lee, Dongmyung. 2010. "Measuring Efficiency of Recycling Food Wastes Facilities using DEA." J Korean Soc Qual Manag 38(2):212-224.
  10. Kim, Ho. 2009. "A Case Study on the Regional Agricultural Cluster at Asam Area." Korean Journal of Ogranic Agriculture 17(4):463-81.
  11. Kim, Sunjin, Yoon, Jihuan, and Cho. 2006. "Efficiency Analysis for Brand of Franchise Restaurant and Franchisees: by Applying Data Envelopment Analysis(DEA)." The Tourism Sciences Society of Korea 30(5):197-217.
  12. Lee, Yongsun. 2011. Mid to Long-Term Development Strategy for Kimchi Industry. Korea Rural Economic Institute.
  13. Park, Pyungyong, and Lee, Sangmin. 2015. "Study on the Efficiency Measurement of Domestic casino companies utilize DEA: Focusing on the foreigner-only casinos." The Korea Academic Society of Tourism and Leisure 27(2):329-346.
  14. Ray, S. C. 2004. Data Envelopment Analysis: Theory and Techniques for Economics and Operations Research. NY: Cambridge University Press.
  15. Seo, Yongae, and Na, Jeonggi. 2006. "Measuring Efficiency of Korean Franchise Restaurant Business: Data Envelopment Analysis." The Tourism Sciences Society of Korea 30(1):295-315.
  16. Yoo, Sungjin, Kim, Yonghee, Kim, Joohoon, and Choi, Jeongil. 2014. "The Evaluation of Administrative Efficiency of the Korean University Using DEA Model." J Korean Soc Qual Manag 42(4):647-664.
  17. Yoo, Yungmyung, and Kim, Youngbin. 2015. "The Efficiency Analysis and the Measurement of Monetary Inefficiency Value for Distribution Industry." J Regional Studies and Development 24(1):1-35.