Measuring performance of two-stage network structures by DEA: A review and future perspective
01 Dec 2010-Omega-international Journal of Management Science (OMEGA (INTERNATIONAL JOURNAL OF MANAGEMENT SCIENCE))-Vol. 38, Iss: 6, pp 423-430
TL;DR: In this article, the authors present a review of data envelopment analysis (DEA) methods for peer decision-making units (DMUs) and show that all the existing approaches can be categorized as using either Stackelberg (leader-follower) or cooperative game concepts.
Abstract: Data envelopment analysis (DEA) is a method for measuring the efficiency of peer decision making units (DMUs). An important area of development in recent years has been devoted to applications wherein DMUs represent two-stage or network processes. One particular subset of such processes is those in which all the outputs from the first stage are the only inputs to the second stage. The current paper reviews these models and establishes relations among various approaches. We show that all the existing approaches can be categorized as using either Stackelberg (leader-follower), or cooperative game concepts. Future perspectives and challenges are discussed.
Citations
More filters
01 Jan 2011
TL;DR: This chapter discusses the basic DEA models and some of their extensions, which have been successfully applied to a host of many different types of entities engaged in a wide variety of activities in many contexts worldwide.
Abstract: In about 30 years, Data Envelopment Analysis (DEA) has grown into a powerful quantitative, analytical tool for measuring and evaluating the performance. DEA has been successfully applied to a host of many different types of entities engaged in a wide variety of activities in many contexts worldwide. This chapter discusses the basic DEA models and some of their extensions.
581 citations
TL;DR: The five most active DEA subareas in recent years are identified; among them the “two-stage contextual factor evaluation framework” is relatively more active.
Abstract: This study surveys the data envelopment analysis (DEA) literature by applying a citation-based approach. The main goals are to find a set of papers playing the central role in DEA development and to discover the latest active DEA subareas. A directional network is constructed based on citation relationships among academic papers. After assigning an importance index to each link in the citation network, main DEA development paths emerge. We examine various types of main paths, including local main path, global main path, and multiple main paths. The analysis result suggests, as expected, that Charnes et al. (1978) [Charnes A, Cooper WW, Rhodes E. Measuring the efficiency of decision making units. European Journal of Operational Research 1978; 2(6): 429–444] is the most influential DEA paper. The five most active DEA subareas in recent years are identified; among them the “two-stage contextual factor evaluation framework” is relatively more active. Aside from the main path analysis, we summarize basic statistics on DEA journals and researchers. A growth curve analysis hints that the DEA literature’s size will eventually grow to at least double the size of the existing literature.
482 citations
Additional excerpts
...[93], and Casstelli et al....
[...]
TL;DR: In this paper, the authors proposed a dynamic DEA model involving network structure in each period within the framework of a slacks-based measure approach, and applied this model to a dataset of US electric utilities and compared the result with that of DSBM.
Abstract: We propose a dynamic DEA model involving network structure in each period within the framework of a slacks-based measure approach. We have previously published the network SBM (NSBM) and the dynamic SBM (DSBM) models separately. Hence, this article is a composite of these two models. Vertically, we deal with multiple divisions connected by links of network structure within each period and, horizontally, we combine the network structure by means of carry-over activities between two succeeding periods. This model can evaluate (1) the overall efficiency over the entire observed period, (2) dynamic change of period efficiency and (3) dynamic change of divisional efficiency. The model can be implemented in input-, output- or non-(both) oriented forms under the CRS or VRS assumptions on the production possibility set. Finally, we applied this model to a dataset of US electric utilities and compared the result with that of DSBM.
480 citations
TL;DR: This paper reviews studies on network DEA by examining the models used and the structures of the network system of the problem being studied, and highlights some directions for future studies from the methodological point of view.
446 citations
Cites background from "Measuring performance of two-stage ..."
...Cook, Liang, and Zhu (2010) reviewed a number of models for the basic two-stage system, in which the system has only two processes connected in series, and the second only consumes all the outputs from the first for production....
[...]
TL;DR: In this article, the authors analyzed technical efficiency of Japanese banks from 2000 to 2007 and showed that NPLs remain a significant burden as for banks' performance, and that banks' inputs have to be utilised more efficiently, particularly labour and premises.
Abstract: The paper analyses technical efficiency of the Japanese banks from 2000 to 2007. The estimation technique is based on the Russell directional distance function that takes into consideration not only desirable outputs but also an undesirable output that is represented by non-performing loans (NPLs). The results indicate that NPLs remain a significant burden as for banks' performance. We show that banks' inputs have to be utilised more efficiently, particularly labour and premises. We also argue that a further restructuring process is needed in the segment of Regional Banks. We conclude that the Japanese banking system is still far away from being fully consolidated and restructured.
285 citations
References
More filters
TL;DR: A nonlinear (nonconvex) programming model provides a new definition of efficiency for use in evaluating activities of not-for-profit entities participating in public programs and methods for objectively determining weights by reference to the observational data for the multiple outputs and multiple inputs that characterize such programs.
25,433 citations
TL;DR: In this article, the authors present DEA Software Tools and Technology: A State-of-the-Art Survey with DEA Estimators and their Applications in Data Envelopment Analysis.
Abstract: -Preface W.W. Cooper, L.M. Seiford, J. Zhu. -1. Data Envelopment Analysis: History, Models and Interpretations W.W. Cooper, L.M. Seiford, J. Zhu. -2. Returns to Scale in DEA: R.D. Banker, W.W. Cooper, L.M. Seiford, J. Zhu. -3. Sensitivity Analysis in DEA: W.W. Cooper, Shanling Li, L.M. Seiford, J. Zhu. -4. Incorporating Value Judgments in DEA: E. Thanassoulis, M.C. Portela, R. Allen. -5. Distance Functions with Applications to DEA R. Fare, S. Grosskopf, G. Whittaker. -6. Qualitative Data in DEA W.D. Cook. -7. Congestion: Its Identification and Management with DEA W.W. Cooper, Honghui Deng, L.M. Seiford, J. Zhu. -8. Malmquist Productivity Index: Efficiency Change Over Time K. Tone. -9. Chance Constrained DEA: W.W. Cooper, Zhimin Huang, S.X. Li. -10. Performance of the Bootstrap for DEA Estimators and Iterating the Principle: L. Simar, P.W.Wilson. -11. Statistical Tests Based on DEA Efficiency Scores R.D. Banker, R. Natarajan. -12. Performance Evaluation in Education: Modeling Educational Production J. Ruggiero. -13. Assessing Bank and Bank Branch Performance: Modeling Considerations and Approaches J.C. Paradi, S. Vela, Zijiang Yang. -14. Engineering Applications of Data Envelopment Analysis: Issues and Opportunities: K.P. Triantis. -15. Benchmarking in Sports: Bonds or Ruth: Determining the Most Dominant Baseball Batter Using DEA T.R. Anderson. -16. Assessing the Selling Function in Retailing: Insights from Banking, Sales forces, Restaurants & Betting shops A.D. Athanassopoulos. -17. Health Care Applications: From Hospitals to Physicians, From Productive Efficiency to Quality Frontiers: J.A. Chilingerian, H.D. Sherman. -18. DEA Software Tools and Technology: A State-of-the-Art Survey R. Barr. -Notes about Authors. Author Index. Subject Index.
1,462 citations
TL;DR: The relational model developed in this paper is more reliable in measuring the efficiencies and consequently is capable of identifying the causes of inefficiency more accurately.
1,112 citations
"Measuring performance of two-stage ..." refers methods or result in this paper
...Throughout the paper, we use the Kao and Hwang [4] data set involving non-life insurance companies in Taiwan....
[...]
...Using the notation of Chen and Zhu [10] and Kao and Hwang [4], we assume each DMUj (j=1, 2, y, n) has m inputs xij, (i=1, 2, y, m) to the first stage, and D outputs zdj, (d=1, 2, y, D) from that stage....
[...]
...; s Model (3) is the Kao and Hwang [4] model and the centralized model developed in [6]....
[...]
...As in Kao and Hwang [4], we have ej 1⁄4 e(1)j e 2 j at optimality provided we assumewd 1⁄4 ~ wd Note that such a decomposition of efficiency is not available in the standard DEA approach, and the network DEA approaches....
[...]
...[25], Chen and Zhu’s [10] model under the CRS assumption is equivalent to the Kao and Hwang’s [4] model....
[...]
TL;DR: A slacks-based network DEA model is proposed, called Network SBM, that can deal with intermediate products formally and evaluate divisional efficiencies along with the overall efficiency of decision making units (DMUs).
954 citations
"Measuring performance of two-stage ..." refers methods in this paper
...[14] Tone K, Tsutsui M. Network DEA: A slacks-based measure approach....
[...]
...The network DEA approach of Färe and Whittaker [13] and Färe and Grosskopf [8], and the slacks-based network DEA approach of Tone and Tsutsui [14,15] may involve more than two stages....
[...]
...The network DEA approach of Färe and Whittaker [13] and Färe and Grosskopf [8], and the slacks-based network DEA approach of Tone and Tsutsui [14,15] may involve more than two stages....
[...]
...[15] Tone K, Tsutsui M. Dynamic DEA: A slacks-based measure approach....
[...]
TL;DR: In this article, the authors examined the performance of the top 55 U.S. commercial banks via a two-stage production process that separates profitability and marketability and uncovered substantial performance inefficiency in both dimensions.
Abstract: Utilizing recent developments in data envelopment analysis (DEA), this paper examines the performance of the top 55 U.S. commercial banks via a two-stage production process that separates profitability and marketability. Substantial performance inefficiency is uncovered in both dimensions. Relatively large banks exhibit better performance on profitability, whereas smaller banks tend to perform better with respect to marketability. New contextdependent performance measures are defined for profitability and marketability which employ a DEA stratification model and a DEA attractiveness measure. When combined with the original DEA measure, the context-dependent performance measure better characterizes the profitability and marketability of 55 U.S. commercial banks. The new approach identifies areas for improved bank performance over the two-stage production process. The effect of acquisition on efficiency and attractiveness is also examined.
878 citations
"Measuring performance of two-stage ..." refers background or methods in this paper
...Seiford and Zhu [2] use the standard DEA approach which does not address potential conflicts between the two stages arising from the intermediate measures....
[...]
...Similar to Seiford and Zhu [2], Sexton and Lewis [12] also use the standard DEA approach where in one of their standard DEA models, projected (efficient) intermediate measures are used in the second stage efficiency calculation....
[...]
...Other examples include Fortune 500 companies performance (Seiford and Zhu [2]; Zhu [3])....
[...]
...For example, Seiford and Zhu [2] use a twostage network structure to measure the profitability and marketability of US commercial banks....
[...]