Evaluating efficiency in water and sewerage services: An integrated DEA approach with DOE and PCA

Evaluating the performance of service organizations like Water and Sewerage companies is essential for optimal operations, high-quality service, and cost efficiency. This paper introduces a model using data envelopment analysis (DEA) to assess the efficiency of operational units within such companies. The selection of key performance indicators is complicated by the numerous inputs and outputs, each affecting systems and activities differently. To enhance DEA model performance due to the imbalance between the number of inputs/outputs and the number of units under evaluation, this research integrates design of experiments (DOE) and principal component analysis (PCA) for variable screening and data reduction, creating new linear combinations with minimal information loss. These methods represent a new direction in handling numerous variables in DEA models. Addressing unit heterogeneity by removing environmental factors from inputs reduces research errors. A case study showed that some units can achieve high efficiency with fewer inputs and more valuable outputs. The findings offered managerial insights for informed decision-making and strategic planning, optimizing resources in line with the company's mission and vision. This methodology ultimately improves service reliability, customer satisfaction, and environmental sustainability. The graphical abstract has been simplified to enhance readability and focus on the primary methodological advances. It emphasizes the integration of PCA for dimensionality reduction, DOE for variable scereening, and DEA for efficiency evaluation.