A new slacks-based measure of Malmquist-Luenberger index in the presence of undesirable outputs

In the majority of production processes, noticeable amounts of bad byproducts or bad outputs are produced. The negative effects of the bad outputs on efficiency cannot be handled by the standard Malmquist index to measure productivity change over time. Toward this end, the Malmquist-Luenberger index (MLI) has been introduced, when undesirable outputs are present. In this paper, we introduce a Data Envelopment Analysis (DEA) model as well as an algorithm, which can successfully eliminate a common infeasibility problem encountered in MLI mixed period problems. This model incorporates the best endogenous direction amongst all other possible directions to increase desirable output and decrease the undesirable outputs at the same time. A simple example used to illustrate the new algorithm and a real application of steam power plants is used to show the applicability of the proposed model.

Business case development

Today, focus is shifting to creation of bio-energy, biofuel and bioproducts from cellulosic biomass derived from various sources, including existing and new crops and their residues, trees and forest residues, and municipal or industrial wastes. At present, biomass co-firing in modern coal power plants with efficiencies up to 45% is the most cost-effective biomass use for power generation. Due to feedstock availability issues, dedicated biomass plants for combined heat and power (CHP), are typically of smaller size and lower electrical efficiency compared to coal plants. The financial model discussed in the chapter is suitable for all countries both in the West and in the developing world. From the economic analysis given in the chapter it can be concluded that intermediate pyrolysis technology proves to be very effective in terms of product qualities of the oil produced and also the return on investment is around 4 to 5 years.