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THE EFFICIENCY MEASUREMENT OF OIL AND GAS SERVICES EQUIPMENT

CHEMICAL COMPANIES BY USING CCR OUTPUT-ORIENTATION

PREPARED BY: NUR AIN SYARMILLA BINTI MOHD ZAIN SUPERVISOR: SIR MOHD FAIEZ BIN SUHAIMIN

2022464814 K242\58

ABSTRACT METHODOLOGY

This study focuses on measuring the efficiency of 12 chemical oil and gas DECISION MAKING UNIT & DATA INPUT AND OUTPUT

companies in Malaysia using Data Envelopment Analysis (DEA). The analysis used

three inputs: number of employees, total assets, and total costs, while the output

was total revenue. The results showed that five companies Deleum Chemicals,

Reservoir Link, Sumisaujana TCM Chemical, Uzma Berhad, and Barakah Offshore

Petroleum were fully efficient with a score of 1. The other companies had efficiency

scores between 0.089974 and 0.998281, meaning they were inefficient. Among the

efficient companies, Barakah Offshore Petroleum was the most frequently used as

a reference for the inefficient ones. To improve efficiency, companies should aim

to increase their revenue while maintaining the same level of input. OUTPUT ORIENTATION DEA-CCR

MODEL

PROBLEM STATEMENT

The oil and gas service equipment (OGSE) chemical industry in

Malaysia faces rising costs and unstable oil prices, making it

difficult for companies to operate efficiently. Many companies

are using high inputs but producing low output. This study

aims to identify which companies are efficient and which are

not, using Data Envelopment Analysis (DEA), to help improve

overall performance in the industry.

OBJECTIVE

RESULT & DISCUSSION

To identify the input and output of Chemical OGSE company.

To determine the efficiency of Chemical OGSE company by using Relative Efficiency Score of Chemical Company in DEA

CCR Output Orientation.

To provide the improvement for the efficiency Chemical OGSE The DEA results show that 5 company are efficient

company in Malaysia using LINGO software.

with score 1

The remaining company are inefficient with score

range between 0.089974 and 0.998281

IMPLEMENTATION DMU 2 is the least efficient with score 0.089974

DMU 2 inefficiency due to a low output relative to its

Objective function input

Objective function were generate to maximize The inefficiency is attributed to a imbalanced between

output inputs and output

The output orientation was chosen in addressing

the output in this project Projection Determination

References Set for Inefficient Company and Dual Weight

Constraints

Constraint 1: Efficiency scores for each chemical

company must be less than or equal 1

Constraint 2: Inputs and output must be scaled to

enable the proportional evaluation where efficient

of the companies maximize output or minimize

inputs

Non Negativity Constraints Relative Efficiency Score of Chemical Company in DEA

Ensures that weights assigned to inputs and

output are strictly non negative

This guarantees that all variables will contribute

positive to the efficiency score

DMU 2 output projection indicates the following adjustment:

CONCLUSION i) Increase total revenue by 999.90%

ii) Reduce total number employee by 90.18%

This study used DEA to measure the To improve efficiency, the company must optimize its output

efficiency of 12 oil and gas service to achieve their target

equipment companies in Malaysia.

Five companies were fully efficient, Why reduce employee DMU 2?

while seven were inefficient due to

unbalanced inputs and outputs. RECOMMENDATION DMU 2 uses more employees than needed.

DMU 2 was the least efficient. To Future study provide improvement This extra input (called slack) does not

improve, these companies should suggestions for inefficient companies based help increase output. To improve

increase their revenue without on DEA results. efficiency, the number of employees

should be reduced to match the level used

increasing input to reach an efficient The recommendations are based on by efficient companies.

level. projections from efficient companies

(reference sets)