Improved Measures of Manufacturing Maintenance in a Capital Budgeting Context: An Application of Data Envelope Analysis Efficiency Measures.

The article examines the use of Data Envelopment Analysis as a method of aggregating maintenance operating information into a single summary efficiency measure in a capital budgeting context. The difficulty in planning and controlling maintenance performance is exacerbated by the lack of a sufficient method of measuring maintenance performance. Although control information may have been inherently part of overhead allocation rates, such information becomes less useful as the technological and economic business environment changes. Thus, a different approach to gaining information to plan and control service department expenditures is warranted. Of the possible types of service departments, maintenance and repairs departments may have the most significant effect on the producing departments. A method of aggregating and summarizing data into a summary performance measure analogous to return on investment measures in profit centers would aid in maintenance planning and control decisions. In many companies, historical standards are used to measure performance in maintenance.