Cost and Allocative Efficiency in Buyer-Supplier

The aim of this paper is the evaluation overall performance of buyer-supplier relationships. In some situations the cost of inputs in a buyer-supplier chain are available,on the other hand, achieving a low cost position is necessary for most businesses. And, in a buyer-supplier chain wants to know how assign inputs with the least cost. This paper introduces cost efficiency with same and different costs of inputs. Moreover, cost efficiency not only does it improve profitability, but businesses with a low cost position are better able to drive growth through higher investment in sales, marketing, improve customer service and new product development, as well as more competitive pricing in buyer-supplier. Moreover, in this paper we introduce allocative and technical efficiency of buyer-supplier that based on the Data envelopment analysis (DEA). And show how far the buyer-supplier is from the point of maximum profitability given the existing market prices for inputs and products, and also is achieved when the value consumers place on a good or service equals the cost of the resources used up in production. Finally, we illustrate the proposed models by an example.