IDEAS home Printed from https://ideas.repec.org/a/taf/tsysxx/v47y2016i5p1202-1220.html
   My bibliography  Save this article

Concurrent estimation of efficiency, effectiveness and returns to scale

Author

Listed:
  • Mohsen Khodakarami
  • Amir Shabani
  • Reza Farzipoor Saen

Abstract

In recent years, data envelopment analysis (DEA) has been widely used to assess both efficiency and effectiveness. Accurate measurement of overall performance is a product of concurrent consideration of these measures. There are a couple of well-known methods to assess both efficiency and effectiveness. However, some issues can be found in previous methods. The issues include non-linearity problem, paradoxical improvement solutions, efficiency and effectiveness evaluation in two independent environments: dividing an operating unit into two autonomous departments for performance evaluation and problems associated with determining economies of scale. To overcome these issues, this paper aims to develop a series of linear DEA methods to estimate efficiency, effectiveness, and returns to scale of decision-making units (DMUs), simultaneously. This paper considers the departments of a DMU as a united entity to recommend consistent improvements. We first present a model under constant returns to scale (CRS) assumption, and examine its relationship with one of existing network DEA model. We then extend model under variable returns to scale (VRS) condition, and again its relationship with one of existing network DEA models is discussed. Next, we introduce a new integrated two-stage additive model. Finally, an in-depth analysis of returns to scale is provided. A case study demonstrates applicability of the proposed models.

Suggested Citation

  • Mohsen Khodakarami & Amir Shabani & Reza Farzipoor Saen, 2016. "Concurrent estimation of efficiency, effectiveness and returns to scale," International Journal of Systems Science, Taylor & Francis Journals, vol. 47(5), pages 1202-1220, April.
    • Handle: RePEc:taf:tsysxx:v:47:y:2016:i:5:p:1202-1220
    DOI: 10.1080/00207721.2014.919073
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00207721.2014.919073
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00207721.2014.919073?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    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. Chen, Yao & Liang, Liang & Zhu, Joe, 2009. "Equivalence in two-stage DEA approaches," European Journal of Operational Research, Elsevier, vol. 193(2), pages 600-604, March.
    3. Karlaftis, Matthew G., 2004. "A DEA approach for evaluating the efficiency and effectiveness of urban transit systems," European Journal of Operational Research, Elsevier, vol. 152(2), pages 354-364, January.
    4. Yu, Ming-Miin, 2008. "Assessing the technical efficiency, service effectiveness, and technical effectiveness of the world's railways through NDEA analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(10), pages 1283-1294, December.
    5. Chen, Yao & Cook, Wade D. & Li, Ning & Zhu, Joe, 2009. "Additive efficiency decomposition in two-stage DEA," European Journal of Operational Research, Elsevier, vol. 196(3), pages 1170-1176, August.
    6. Yu, Ming-Miin & Lin, Erwin T.J., 2008. "Efficiency and effectiveness in railway performance using a multi-activity network DEA model," Omega, Elsevier, vol. 36(6), pages 1005-1017, December.
    7. Tone, Kaoru & Tsutsui, Miki, 2009. "Network DEA: A slacks-based measure approach," European Journal of Operational Research, Elsevier, vol. 197(1), pages 243-252, August.
    8. Du, Juan & Liang, Liang & Chen, Yao & Bi, Gong-bing, 2010. "DEA-based production planning," Omega, Elsevier, vol. 38(1-2), pages 105-112, February.
    9. 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.
    10. Quirino Paris, 1981. "Multiple Optimal Solutions in Linear Programming Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(4), pages 724-727.
    11. 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.
    12. Keh, Hean Tat & Chu, Singfat & Xu, Jiye, 2006. "Efficiency, effectiveness and productivity of marketing in services," European Journal of Operational Research, Elsevier, vol. 170(1), pages 265-276, April.
    13. Amir Shabani & Reza Farzipoor Saen & Hussein Vazifehdoost, 2013. "The use of data envelopment analysis for international market selection in the presence of multiple dual-role factors," International Journal of Business Information Systems, Inderscience Enterprises Ltd, vol. 13(4), pages 471-489.
    14. Chiou, Yu-Chiun & Lan, Lawrence W. & Yen, Barbara T.H., 2010. "A joint measurement of efficiency and effectiveness for non-storable commodities: Integrated data envelopment analysis approaches," European Journal of Operational Research, Elsevier, vol. 201(2), pages 477-489, March.
    15. Chiou, Yu-Chiun & Chen, Yen-Heng, 2006. "Route-based performance evaluation of Taiwanese domestic airlines using data envelopment analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 42(2), pages 116-127, March.
    16. 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.
    17. Cook, Wade D. & Zhu, Joe & Bi, Gongbing & Yang, Feng, 2010. "Network DEA: Additive efficiency decomposition," European Journal of Operational Research, Elsevier, vol. 207(2), pages 1122-1129, December.
    18. Lim, Sungmook & Zhu, Joe, 2013. "Integrated data envelopment analysis: Global vs. local optimum," European Journal of Operational Research, Elsevier, vol. 229(1), pages 276-278.
    19. Mouzas, Stefanos, 2006. "Efficiency versus effectiveness in business networks," Journal of Business Research, Elsevier, vol. 59(10-11), pages 1124-1132, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mahdiloo, Mahdi & Toloo, Mehdi & Duong, Thach-Thao & Farzipoor Saen, Reza & Tatham, Peter, 2018. "Integrated data envelopment analysis: Linear vs. nonlinear model," European Journal of Operational Research, Elsevier, vol. 268(1), pages 255-267.

    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. Lu, Wen-Min & Kweh, Qian Long & Nourani, Mohammad & Huang, Feng-Wen, 2016. "Evaluating the efficiency of dual-use technology development programs from the R&D and socio-economic perspectives," Omega, Elsevier, vol. 62(C), pages 82-92.
    3. Lu, Wen-Min & Wang, Wei-Kang & Hung, Shiu-Wan & Lu, En-Tzu, 2012. "The effects of corporate governance on airline performance: Production and marketing efficiency perspectives," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 529-544.
    4. Chiou, Yu-Chiun & Lan, Lawrence W. & Yen, Barbara T.H., 2010. "A joint measurement of efficiency and effectiveness for non-storable commodities: Integrated data envelopment analysis approaches," European Journal of Operational Research, Elsevier, vol. 201(2), pages 477-489, March.
    5. Mahdiloo, Mahdi & Toloo, Mehdi & Duong, Thach-Thao & Farzipoor Saen, Reza & Tatham, Peter, 2018. "Integrated data envelopment analysis: Linear vs. nonlinear model," European Journal of Operational Research, Elsevier, vol. 268(1), pages 255-267.
    6. Kao, Chiang, 2017. "Efficiency measurement and frontier projection identification for general two-stage systems in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 261(2), pages 679-689.
    7. Zhang, Linyan & Chen, Kun, 2019. "Hierarchical network systems: An application to high-technology industry in China," Omega, Elsevier, vol. 82(C), pages 118-131.
    8. 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.
    9. 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.
    10. Azadi, Majid & Shabani, Amir & Khodakarami, Mohsen & Farzipoor Saen, Reza, 2015. "Reprint of “Planning in feasible region by two-stage target-setting DEA methods: An application in green supply chain management of public transportation service providers”," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 74(C), pages 22-36.
    11. Hsiao-Yen Mao & Wen-Min Lu & Hsin-Yen Shieh, 2023. "Exploring the Influence of Environmental Investment on Multinational Enterprises’ Performance from the Sustainability and Marketability Efficiency Perspectives," Sustainability, MDPI, vol. 15(10), pages 1-23, May.
    12. Simona Cohen-Kadosh & Zilla Sinuany-Stern, 2020. "Hip fracture surgery efficiency in Israeli hospitals via a network data envelopment analysis," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 28(1), pages 251-277, March.
    13. Khoveyni, Mohammad & Fukuyama, Hirofumi & Eslami, Robabeh & Yang, Guo-liang, 2019. "Variations effect of intermediate products on the second stage in two-stage processes," Omega, Elsevier, vol. 85(C), pages 35-48.
    14. 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.
    15. Galagedera, Don U.A. & Watson, John & Premachandra, I.M. & Chen, Yao, 2016. "Modeling leakage in two-stage DEA models: An application to US mutual fund families," Omega, Elsevier, vol. 61(C), pages 62-77.
    16. Yang, Guo-liang & Fukuyama, Hirofumi & Song, Yao-yao, 2018. "Measuring the inefficiency of Chinese research universities based on a two-stage network DEA model," Journal of Informetrics, Elsevier, vol. 12(1), pages 10-30.
    17. Patrizii, Vincenzo, 2020. "On network two stages variable returns to scale Dea models," Omega, Elsevier, vol. 97(C).
    18. Ming-Miin Yu & Po-Chi Chen, 2011. "Measuring air routes performance using a fractional network data envelopment analysis model," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 19(1), pages 81-98, March.
    19. Huang, Chin-wei, 2018. "Assessing the performance of tourism supply chains by using the hybrid network data envelopment analysis model," Tourism Management, Elsevier, vol. 65(C), pages 303-316.
    20. Azadi, Majid & Shabani, Amir & Khodakarami, Mohsen & Farzipoor Saen, Reza, 2014. "Planning in feasible region by two-stage target-setting DEA methods: An application in green supply chain management of public transportation service providers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 324-338.

    More about this item

    Statistics

    Access and download statistics

    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:taf:tsysxx:v:47:y:2016:i:5:p:1202-1220. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/TSYS20 .

    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.