The Potential Input Serving (PIS) and Potential Output Improvement (POI) in the Kagera Sugar Ltd Based on Self Technical Efficiency Analysis

Abstract

Abstract This paper examines the Potential Input Serving (PIS) and Potential Output Improvement (POI) in the Kagera Sugar Limited (KSL). It establishes how the sugar factory makes use of all the available potentials in its production activities and operations. Data were collected from 16 independent decision-making units (DMUs) in each production year, from 2005 to 2021. The Data Envelopment Analysis (DEA)-CCR model was employed to estimate the efficiency levels for all DMUs at the first stage, then further analysis was carried out in order to estimate the Potential Input Serving (PIS) and Potential Output Improvement (POI) of the factory. It was found that on average the factory for 16 production years had an overall Technical efficiency (OTE) of 93.7%, 99.1% Pure Technical Efficiency (PTE) and 94.6% of Scale Efficiency (SE). Furthermore, revealed that, by assuming the Constant Return to Scale (CRS) technology, on average, 19.48% of employees, 15.23% of actual crushing hours and 6.53% of cane crushed could have been saved if the factory could operate efficiently in all 16 production years. In addition, the factory could have produced more sugar by 7.17% and molasses by 12.36%. However, under the Variable Return to Scale (VRS) technology, the potential input savings dropped to an average of 8.01% for number of employees, 6.73% for actual crushing hours and 6.31% for sugarcane crushed while the potential output improvement was observed to be 7.5% and 9.45% for sugar and molasses respectively.