Two-Stage DEA: An Application to Major League Baseball
01 Apr 2003-Journal of Productivity Analysis (Kluwer Academic Publishers)-Vol. 19, Iss: 2, pp 227-249
TL;DR: In this article, the authors use DEA to model DMUs that produce in two stages, with output from the first stage becoming input to the second stage, and apply the model to Major League Baseball, demonstrating its advantages over a standard DEA model.
Abstract: We show how to use DEA to model DMUs that produce in two stages, with output from the first stage becoming input to the second stage. Our model allows for any orientation or scale assumption. We apply the model to Major League Baseball, demonstrating its advantages over a standard DEA model. Our model detects inefficiencies that standard DEA models miss, and it can allow for resource consumption that the standard DEA model counts towards inefficiency. Additionally, our model distinguishes inefficiency in the first stage from that in the second stage, allowing managers to target inefficient stages of the production process.
Citations
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TL;DR: A variation of the two-stage SBM model by incorporating a leader–follower structure is proposed and applied to Chinese commercial banks and the results show that the proposed approach can increase efficiencies of inefficient banks and halve the projection distance of some inefficient banks.
Abstract: The two-stage slack-based measure (SBM) model has many applications in the real world. Due to the limitations of the SBM model on which it is based, the two-stage SBM model unfortunately gives unrealistically low efficiencies and rather far projections (Tone in Eur J Oper Res 197(1):243–252, 2010) for inefficient decision-making unit. Based on the novel idea in Tone (2010), this paper proposes a variation of the two-stage SBM model by incorporating a leader–follower structure and applies the proposed approach to Chinese commercial banks. The results show that our proposed approach can increase efficiencies of inefficient banks and halve the projection distance of some inefficient banks.
11 citations
Cites background from "Two-Stage DEA: An Application to Ma..."
...Traditional DEA always treats each DMU as a black box, and therefore omits the inefficiencies of internal divisions (Sexton and Lewis, 2003)....
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...Traditional DEA always treats each DMU as a black box, and therefore omits the inefficiencies of internal divisions (Sexton & Lewis, 2003)....
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TL;DR: In this paper, the authors proposed a two-stage DEA model to decompose the IT investment impacts on productivity in the power plant industry, which allows the integration of production performance and investment performance and provides management with a comprehensive performance evaluation system.
Abstract: The economy has undergone a profound structural transformation in the last two decades. The Information Technology (IT) revolution has expanded well beyond the cutting-edge high-tech sector redefining the rules of global competition. In general, a direct correlation between IT spending and organisational productivity (often referred to as the 'productivity paradox') has been very elusive. Numerous studies have been undertaken to either explain or dispel this paradox. While findings from earlier studies have been conflicting, recent firm-level studies indicate that IT investment has a positive impact on productivity. Data Envelopment Analysis (DEA) has been widely used to evaluate the comparative efficiencies of production processes. We propose a two-stage DEA model to decompose the IT investment impacts on productivity in the power plant industry. IT plays an important role in the effective and efficient generation of electricity in conventional power plants. The proposed model allows the integration of production performance and investment performance and provides management with a comprehensive performance evaluation system. We also propose a benchmarking model in conjunction with our DEA model to measure performance against the 'best-in-class'. The data from 20 public conventional power plants in Iran are used to illustrate and validate our model.
10 citations
Cites background or methods from "Two-Stage DEA: An Application to Ma..."
...…IT impact on firm performance have successfully used DEA (Abad et al., 2004; Banker et al., 1990; Chen and Zhu, 2004; Dasgupta et al., 1999; Kauffman and Weill, 1989; Rho and An, 2007; Seiford and Zhu, 1999; Sexton and Lewis, 2003; Shafer and Byrd, 2000; Wang et al., 1997; Yang, 2006; Zhu, 2000)....
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...Sexton and Lewis (2003) used a two-stage DEA model for major league baseball and demonstrated its advantages over the standard DEA models....
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...Third, a number of studies about the IT impact on firm performance have successfully used DEA (Abad et al., 2004; Banker et al., 1990; Chen and Zhu, 2004; Dasgupta et al., 1999; Kauffman and Weill, 1989; Rho and An, 2007; Seiford and Zhu, 1999; Sexton and Lewis, 2003; Shafer and Byrd, 2000; Wang et al., 1997; Yang, 2006; Zhu, 2000)....
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TL;DR: In this paper, the authors analyzed the importance of transaction costs for vegetable production and supply chain efficiency in Nanjing City, P.R. China, and found that reducing transaction costs could be a useful device for enhancing productivity and quality that could eventually lead to higher farmers' income and better resource management practices.
Abstract: China claims to be the most important vegetable producer in the world today, supplying more than half of the total vegetable production (FAO, 2001). With the increasing the concerns of improving farmers’ welfare, vegetable sector has increasingly drawn the attention of policy makers and scholars. Vegetable producers in Nanjing City, P.R. China have a choice between different marketing outlets for selling their products. Their produce can be sold with a stall or delivered to traders at the wet market, or marketed through the local wholesale market. Farmers can choose to sell the whole harvest or a share of their produce through any one of these outlets. Delivery conditions and quality demands tend to differ widely amongst these outlets, occasioning various types of transaction costs and offering farmers different implicit incentives for adjustment of their production and marketing systems (Lu, 2003, Ruben, et al., 2006). The presence of transaction costs in local markets implies that the efficiency of transactions is seriously constrained. Reduction of the transaction costs might encourage farmers towards resource intensification while increasing their family income (Ruben, et al., 2006). Moreover, within an open market environment, any reduction in transaction costs could be envisaged as a useful device for enhancing productivity and quality that could eventually lead to higher farmers’ income as well as better resource management practices (North, 1990). Vegetable supply chains in the Nanjing area offer a particularly challenging setting for the analysis of the importance of transaction costs for production and supply chain efficiency
10 citations
Cites background or methods from "Two-Stage DEA: An Application to Ma..."
...Sexton and Lewis (2003) showed the simple sample in which each DMU consumes one input, produces and consumes one intermediate product, and produces one output....
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...Following Sexton and Lewis (2003), we extend the classical DEA model to two-stage model....
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...Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies....
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...A two-stage value chain model was applied (Sexton and Lewis, 2003)....
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...Thus, the Two-Stage value chain model can be applied in many managerial contexts (Sexton and Lewis, 2003)....
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01 Jan 2014
TL;DR: In this chapter, several Fuzzy DEA approaches are extended to Network DEA and the resulting models are illustrated on a dataset from the literature.
Abstract: In this chapter a general approach to handle fuzzy data when the units under analysis are formed by a network of processes is presented. Conventional DEA assumes a single-process that consumes all the different inputs and produces all the different outputs. Network DEA, on the contrary, considers different interrelated processes, each one with its own inputs, its own outputs and, very important, its own technology. This allows a more fine-grained analysis although at the expense of requiring more data. Conventional Network DEA approaches assume crisp data although recently two proposals have been made that can process fuzzy data in the special cases of a serial two-stage system and of parallel production processes. There is, however, a need to deal with general networks of processes which can have fuzzy input or output data. In this chapter, several Fuzzy DEA approaches are extended to Network DEA. The resulting models are illustrated on a dataset from the literature.
10 citations
TL;DR: Wang et al. as discussed by the authors proposed a closed-loop network data envelopment analysis model to appraise and investigate the performance of China's regional industrial circular economy systems and provide suggestions for improving industrial CE performance in China.
10 citations
References
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TL;DR: In this paper, a non-parametric productivity measure that explicitly incorporates intermediate products is proposed, which is based on the Productivity Index (PII) and employs a nonparametric approach to measure productivity.
462 citations
TL;DR: A nonparametric, linear programming, frontier procedure for obtaining a measure of managerial efficiency that controls for exogenous features of the operating environment is introduced.
Abstract: The ability of a production unit to transform inputs into outputs is influenced by its technical efficiency and external operating environment. This paper introduces a nonparametric, linear programming, frontier procedure for obtaining a measure of managerial efficiency that controls for exogenous features of the operating environment. The approach also provides statistical tests of the effects of external conditions on the efficient use of each individual input (for an input oriented model) or for each individual output (for an output oriented model). The procedure is illustrated for a sample of nursing homes.
441 citations
"Two-Stage DEA: An Application to Ma..." refers methods in this paper
...Sexton and Silkman (2000) and Fried et al. (1999) present similar but distinct approaches to dealing with site characteristics in standard DEA models....
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Posted Content•
TL;DR: In this article, the authors introduce a frontier model for productivity measurement that explicitly recognizes that some inputs are produced and consumed within the production technology, where intermediate inputs may also be final output.
Abstract: The purpose of this paper is to introduce a frontier model for productivity measurement that explicitly recognizes that some inputs are produced and consumed within the production technology. Here we differ from Koopmans (1951) by assuming that the intermediate inputs may also be final output. This assumption is in line with current international trade theory, where intermediate inputs are tradable. Our model consists of two production units that are interconnected in a network to form a production technology. The productivity measure employed here is the so-called Malmquist productivity index. This index consists of ratios of distance functions. Here these distance functions are defined on the network technology and they are computed using linear programming techniques.
439 citations
TL;DR: It is found that the decomposition of production into subproduction processes reduces the dimensions of problem specification, with the effect that a larger number of variables may be usefully included in the model.
Abstract: Agricultural production is often characterised by multiple inputs and multiple outputs to multiple production processes. Where an output from one process is used as an input to another, this output is called an intermediate product. This is a common situation when a farm produces both crops and livestock. The analysis of production efficiency is important for the evaluation of agricultural policy, but until recently, no methods have explicitly included intermediate products. This study applies a non-parametric technique of efficiency measurement which includes intermediate products. The data set is a sample of dairy farms drawn using a complex survey design. The use of non-parametric efficiency measurement and the subsequent application of bootstrapping and kernel density estimation to the results allow inferences to be drawn concerning the whole population from which the sample was drawn. We find that the decomposition of production into subproduction processes reduces the dimensions of problem specification, with the effect that a larger number of variables may be usefully included in the model.
145 citations