Free disposal hull efficiency scores of units with network structures

Ibrahim M. Tavakoli and Amin Mostafaee

European Journal of Operational Research, 2019, vol. 277, issue 3, 1027-1036

Abstract: Data Envelopment Analysis (DEA) is a nonparametric method for measuring the performance of a set of decision making units (DMUs). Recently, applications of DEA have attracted particular interest of scholars in circumstances in which two-stage or network structures are involved. This paper is the first systematic attempt to extend the network DEA models to a class of non-convex technologies, i.e., Free Disposal Hull (FDH). The models are provided in both cases of the same and the different optimal peers in both stages. Some closed form formulae are provided to calculate the overall and stage efficiency scores under different RTS assumptions, without solving any mathematical programming problem. Also, the formulations are adapted to include the situations in which some of the data are missing. Furthermore, it is proved that the provided models project the inefficient DMUs onto the efficient frontier. Finally, the case of Bank Keshavarzi Iran is used to validate the reasonableness and acceptability of the proposed approach in FDH models.

Keywords: Data Envelopment Analysis (DEA); FDH technologies; Two-stage structure; Network DEA (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:277:y:2019:i:3:p:1027-1036

DOI: 10.1016/j.ejor.2019.03.023

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