COMPOSITE NETWORK DATA ENVELOPMENT ANALYSIS MODEL

Quanling Wei, Hong Yan () and Liyong Pang
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Quanling Wei: School of Economics, Renmin University of China, Haidian District, Beijing, China
Hong Yan: Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Kowloon, Hong Kong, China
Liyong Pang: School of Economics, Renmin University of China, Haidian District, Beijing, China

International Journal of Information Technology & Decision Making (IJITDM), 2011, vol. 10, issue 04, 613-633

Abstract: This paper extends the DEA model to considering the decision-making unit (DMU) with the network structure. We define the networkDMUand its network DEA efficiency based on the postulate system. On the series structure of theDMU, we further discuss a sequential optimization model originally proposed by Sexton and Lewis.1,2Based on their work, we extend to theDMUwith general network ofkstages and propose a composite network DEA model which evaluate the network DEA efficiency by solving only one linear programming. We show that the network efficiency obtained from the composite model is equivalent to that obtained by the sequential optimization model. We show that a networkDMUis network-efficient if and only if it is efficient at all stages. That is, the network-efficientDMUfollows the "Bellman Optimal Principle." Our model shows that if a networkDMUis not DEA-efficient, then it is not efficient at one stage at least. We also define the projection of the networkDMUon the corresponding production possibility set of networkDMUs. Finally, we discuss other basic structures of the networkDMUand show that the overall network DEA model can be extended to the general networkDMU.

Keywords: Data envelopment analysis; DEA sequential optimization method; network DEA efficiency (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (3)

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DOI: 10.1142/S0219622011004488

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