Inefficiency identification for closed series production systems

Chiang Kao

European Journal of Operational Research, 2019, vol. 275, issue 2, 599-607

Abstract: Decomposing the system efficiency of a network production system into the component division efficiencies helps identify the divisions that affect the performance of the system the most, and making improvements in these increases the system efficiency more effectively. This paper proposes a slacks-based measure (SBM) model to decompose the system efficiency of a closed series system into the product of the division efficiencies divided by the linkage efficiencies, which are expressed as the product of the efficiencies of the intermediate product as the output of the preceding division and the input of the succeeding division. The model has two forms, non-cooperative and cooperative, where the latter always has perfect linkage efficiency. An example of twenty-four Taiwanese non-life insurance companies shows that the system efficiency can indeed be decomposed into division and linkage efficiencies. Since the non-cooperative model sets higher standards than the cooperative model to measure efficiencies, the resulting efficiencies are lower, which alerts the decision maker about the relatively worse performance of the divisions.

Keywords: Data envelopment analysis; Network system; Slacks-based measure; Linkage efficiency (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377221718309950
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:275:y:2019:i:2:p:599-607

DOI: 10.1016/j.ejor.2018.11.054

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().