Efficiency Measurement of Multistage Processes: Context Dependent Numbers of Stages

Wade D. Cook (), Chuanyin Guo (), Wanghong Li, Zhepeng Li (), Liang Liang () and Joe Zhu
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Wade D. Cook: Schulich School of Business, York University, 4700 Keele Street, Toronto, Ontario M3J 1P3, Canada
Chuanyin Guo: School of Economics and Management, Beihang University, Beijing 100191, P. R. China
Wanghong Li: Schulich School of Business, York University, 4700 Keele Street, Toronto, Ontario M3J 1P3, Canada
Zhepeng Li: Schulich School of Business, York University, 4700 Keele Street, Toronto, Ontario M3J 1P3, Canada
Liang Liang: He Fei University of Technology, He Fei, An Hui Province 230009, P. R. China
Joe Zhu: School of Business, Worcester Polytechnic Institute, Worcester, USA

Asia-Pacific Journal of Operational Research (APJOR), 2017, vol. 34, issue 06, 1-18

Abstract: An important area of research involving the benchmarking methodology data envelopment analysis (DEA), concerns the modeling of multistage situations. In the usual multistage settings, it is generally assumed that all decision-making units (DMUs) have the same number and configuration of stages. However, in many real-world examples, this assumption does not hold. Consider, for example, a supply chain setting where for some DMUs, products are shipped directly from a supplier to a retailer (single-stage), while for other DMUs, products can be transshipped through distribution centers (two or more stages). In the current paper, we investigate an efficiency measurement situation where the DMUs exhibit a mix of single and two-stage setups. The particular case examined involves a set of high technology firms that can be thought of as falling into two groups; those firms where the output of interest is the annual revenue generated, and those that not only generate revenue, but as well invest a portion of that revenue in R&D. Firms in the first group can be viewed as being single-stage DMUs while those in the other group are of the two-stage type. The modeling complication here is that the set of DMUs do not explicitly form a homogeneous set of units. We develop a DEA-style model aimed at measuring efficiency in the presence of such nonhomogeneous two-group structures.

Keywords: DEA; multistage; supply chains; nonhomogeneous; context dependent (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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DOI: 10.1142/S0217595917500324

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