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Free disposal hull efficiency scores of units with network structures

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  • Tavakoli, Ibrahim M.
  • Mostafaee, Amin

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.

Suggested Citation

  • Tavakoli, Ibrahim M. & Mostafaee, Amin, 2019. "Free disposal hull efficiency scores of units with network structures," European Journal of Operational Research, Elsevier, vol. 277(3), pages 1027-1036.
    • Handle: RePEc:eee:ejores:v:277:y:2019:i:3:p:1027-1036
    DOI: 10.1016/j.ejor.2019.03.023
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    2. Doumpos, Michalis & Zopounidis, Constantin & Gounopoulos, Dimitrios & Platanakis, Emmanouil & Zhang, Wenke, 2023. "Operational research and artificial intelligence methods in banking," European Journal of Operational Research, Elsevier, vol. 306(1), pages 1-16.
    3. Walter Briec & Kristiaan Kerstens & Ignace Van de Woestyne, 2022. "Nonconvexity in Production and Cost Functions: An Exploratory and Selective Review," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 18, pages 721-754, Springer.
    4. Qu, Jingjing & Wang, Baohui & Liu, Xiaohong, 2022. "A modified super-efficiency network data envelopment analysis: Assessing regional sustainability performance in China," Socio-Economic Planning Sciences, Elsevier, vol. 82(PB).
    5. M.V. Leonov, 2021. "Review of Modern Approaches for Assessing the Effectiveness of Banking," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 20(2), pages 294-326.

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