Technical and scale efficiences analysis of furniture industries from the market pool of Ubá city

Abstract

The organizations must know their operational costs and expenses in order to structure a model for prices formation and take better decisions, besides establishing market strategies and making profits. Although, the small and medium industries from furniture market, and also the micro-companies which work with furniture, tend to have some kind of structure of cost control, however, not totally formed. Considering the furniture market pool from Uba city, which is composed basically of those kinds of industries, one question is asked: What is the efficiency level of those industries? The objective of this paper is to analyze the technical efficiency of the furniture companies from Uba city, in 2007, based on their production costs. It is noticed that from the 33 analyzed companies, 4 of them didnt present any scale problems, but they couldnt raise the profits with raising the production costs. When it comes to the inefficient companies, 10 present only scale efficiency problems, with the correct use of inputs (production costs), and 19 present problems inputs excess and scale problems. The results also indicated that inefficient companies could raise the profits (a) in 19%, in case they use correctly their inputs; and (b) in 28,4% with the same inputs, if they were operating in correct scale.