International Transactions in Operational Research

Additive centralized and Stackelberg DEA models for two‐stage system with shared resources

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Abstract

Data envelopment analysis (DEA) is a nonparametric programming method for evaluating the efficiency performance of decision making units (DMUs) with multiple inputs and outputs. The classic DEA model cannot provide accurate efficiency measurement and inefficiency sources of DMUs with complex internal structure. The network DEA approach opens the “black box” of DMU by taking its internal operations into consideration. The complexities of DMU's internal structure involve not only the organization of substages, but also the inputs allocation and the operational relations among the individual stages. This paper proposes a set of additive DEA models to evaluate and decompose the efficiency of a two‐stage system with shared inputs and operating in cooperative and Stackelberg game situations. Under the assumptions of cooperative and noncooperative gaming, the proposed models are able to highlight the effects of strategic elements on the efficiency formation of DMUs by calculating the optimal proportion of the shared inputs allocated to each stage. The case of information technology in the banking industry at the firm level, as discussed by Wang, is revisited using the developed DEA approach.

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