IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v211y2011i3p515-519.html
   My bibliography  Save this article

Decomposition of technical and scale efficiencies in two-stage production systems

Author

Listed:
  • Kao, Chiang
  • Hwang, Shiuh-Nan

Abstract

Conventional data envelopment analysis (DEA) models are used to measure the technical and scale efficiencies of a system when it is considered as a whole unit. This paper extends the efficiency measurement to two-stage systems where each stage has one process and all the outputs from the first process become the inputs of the second. An input-oriented DEA model for the first process is developed to separate the process efficiency into the input technical and scale efficiencies, and an output-oriented model is developed for the second process to separate the process efficiency into the output technical and scale efficiencies. Combining the two models, the system efficiency is expressed as the product of the overall technical and scale efficiencies, where the overall technical and scale efficiencies are the products of the corresponding efficiencies of the two processes, respectively. The detailed decomposition allows the sources of inefficiency to be identified.

Suggested Citation

  • Kao, Chiang & Hwang, Shiuh-Nan, 2011. "Decomposition of technical and scale efficiencies in two-stage production systems," European Journal of Operational Research, Elsevier, vol. 211(3), pages 515-519, June.
    • Handle: RePEc:eee:ejores:v:211:y:2011:i:3:p:515-519
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377-2217(11)00013-0
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kao, Chiang, 2009. "Efficiency decomposition in network data envelopment analysis: A relational model," European Journal of Operational Research, Elsevier, vol. 192(3), pages 949-962, February.
    2. Rolf Färe & Shawna Grosskopf & Gerald Whittaker, 2014. "Network DEA II," International Series in Operations Research & Management Science, in: Wade D. Cook & Joe Zhu (ed.), Data Envelopment Analysis, edition 127, chapter 0, pages 307-327, Springer.
    3. Chen, Yao & Cook, Wade D. & Zhu, Joe, 2010. "Deriving the DEA frontier for two-stage processes," European Journal of Operational Research, Elsevier, vol. 202(1), pages 138-142, April.
    4. Thomas Sexton & Herbert Lewis, 2003. "Two-Stage DEA: An Application to Major League Baseball," Journal of Productivity Analysis, Springer, vol. 19(2), pages 227-249, April.
    5. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    6. Kao, Chiang & Hwang, Shiuh-Nan, 2008. "Efficiency decomposition in two-stage data envelopment analysis: An application to non-life insurance companies in Taiwan," European Journal of Operational Research, Elsevier, vol. 185(1), pages 418-429, February.
    7. Chien Wang & Ram Gopal & Stanley Zionts, 1997. "Use of Data Envelopment Analysis in assessing Information Technology impact on firm performance," Annals of Operations Research, Springer, vol. 73(0), pages 191-213, October.
    8. Cook, Wade D. & Seiford, Larry M., 2009. "Data envelopment analysis (DEA) - Thirty years on," European Journal of Operational Research, Elsevier, vol. 192(1), pages 1-17, January.
    9. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    10. Lawrence M. Seiford & Joe Zhu, 1999. "Profitability and Marketability of the Top 55 U.S. Commercial Banks," Management Science, INFORMS, vol. 45(9), pages 1270-1288, September.
    11. Charnes, A. & Cooper, W. W. & Rhodes, E., 1979. "Measuring the efficiency of decision-making units," European Journal of Operational Research, Elsevier, vol. 3(4), pages 339-338, July.
    12. Kao, Chiang, 2009. "Efficiency measurement for parallel production systems," European Journal of Operational Research, Elsevier, vol. 196(3), pages 1107-1112, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kao, Chiang, 2014. "Network data envelopment analysis: A review," European Journal of Operational Research, Elsevier, vol. 239(1), pages 1-16.
    2. Tatiana Bencova & Andrea Bohacikova, 2022. "DEA in Performance Measurement of Two-Stage Processes: Comparative Overview of the Literature," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 111-129.
    3. Tavakoli, Ibrahim M. & Mostafaee, Amin, 2019. "Free disposal hull efficiency scores of units with network structures," European Journal of Operational Research, Elsevier, vol. 277(3), pages 1027-1036.
    4. Liu, John S. & Lu, Louis Y.Y. & Lu, Wen-Min, 2016. "Research fronts in data envelopment analysis," Omega, Elsevier, vol. 58(C), pages 33-45.
    5. Fukuyama, Hirofumi & Mirdehghan, S.M., 2012. "Identifying the efficiency status in network DEA," European Journal of Operational Research, Elsevier, vol. 220(1), pages 85-92.
    6. AGRELL, Per & HATAMI-MARBINI, Adel, 2011. "Frontier-based performance analysis models for supply chain management; state of the art and research directions," LIDAM Discussion Papers CORE 2011069, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Liu, John S. & Lu, Louis Y.Y. & Lu, Wen-Min & Lin, Bruce J.Y., 2013. "Data envelopment analysis 1978–2010: A citation-based literature survey," Omega, Elsevier, vol. 41(1), pages 3-15.
    8. Hirofumi Fukuyama & William L. Weber, 2017. "Japanese Bank Productivity, 2007–2012: A Dynamic Network Approach," Pacific Economic Review, Wiley Blackwell, vol. 22(4), pages 649-676, October.
    9. Huang, Tai-Hsin & Chen, Kuan-Chen & Lin, Chung-I, 2018. "An extension from network DEA to copula-based network SFA: Evidence from the U.S. commercial banks in 2009," The Quarterly Review of Economics and Finance, Elsevier, vol. 67(C), pages 51-62.
    10. Zhang, Linyan & Chen, Kun, 2019. "Hierarchical network systems: An application to high-technology industry in China," Omega, Elsevier, vol. 82(C), pages 118-131.
    11. Huang, Chin-wei & Ho, Foo Nin & Chiu, Yung-ho, 2014. "Measurement of tourist hotels׳ productive efficiency, occupancy, and catering service effectiveness using a modified two-stage DEA model in Taiwan," Omega, Elsevier, vol. 48(C), pages 49-59.
    12. Pinto, Claudio, 2019. "Model and measure the relative efficiency of a four-stage production process. An NDEA multiplier relational model under different systems of resource distribution preferences between sub-processes," MPRA Paper 92617, University Library of Munich, Germany.
    13. Kao, Chiang, 2020. "Decomposition of slacks-based efficiency measures in network data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 283(2), pages 588-600.
    14. Suvvari Anandarao & S. Raja Sethu Durai & Phanindra Goyari, 2019. "Efficiency Decomposition in two-stage Data Envelopment Analysis: An application to Life Insurance companies in India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 17(2), pages 271-285, June.
    15. Cook, Wade D. & Liang, Liang & Zhu, Joe, 2010. "Measuring performance of two-stage network structures by DEA: A review and future perspective," Omega, Elsevier, vol. 38(6), pages 423-430, December.
    16. Li, Yongjun & Liu, Jin & Ang, Sheng & Yang, Feng, 2021. "Performance evaluation of two-stage network structures with fixed-sum outputs: An application to the 2018winter Olympic Games," Omega, Elsevier, vol. 102(C).
    17. Mohammad Amirkhan & Hosein Didehkhani & Kaveh Khalili-Damghani & Ashkan Hafezalkotob, 2018. "Measuring Performance of a Three-Stage Network Structure Using Data Envelopment Analysis and Nash Bargaining Game: A Supply Chain Application," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 17(05), pages 1429-1467, September.
    18. Akther, Syed & Fukuyama, Hirofumi & Weber, William L., 2013. "Estimating two-stage network Slacks-based inefficiency: An application to Bangladesh banking," Omega, Elsevier, vol. 41(1), pages 88-96.
    19. Mirdehghan, S. Morteza & Fukuyama, Hirofumi, 2016. "Pareto–Koopmans efficiency and network DEA," Omega, Elsevier, vol. 61(C), pages 78-88.
    20. Sotiros, Dimitris & Koronakos, Gregory & Despotis, Dimitris K., 2019. "Dominance at the divisional efficiencies level in network DEA: The case of two-stage processes," Omega, Elsevier, vol. 85(C), pages 144-155.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:211:y:2011:i:3:p:515-519. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.