Procedure to Solve Network DEA Based on a Virtual Gap Measurement Model

Abstract

Network DEA models assess production systems that contain a set of network-structured subsystems. Each subsystem has input and output measures from and to the external network and has intermediate measures that link to other subsystems. Most published studies demonstrate how to employ DEA models to establish network DEA models. Neither static nor dynamic network DEA models adjust the links. This paper applies the virtual gap measurement (VGM) model to construct a mixed integer program to solve dynamic network DEA problems. The mixed integer program sets the total numbers of "as-input" and "as-output" equal to the total number of links in the objective function. To obtain the best-practice efficiency, each DMU determines a set of weights for inputs, outputs, and links. The links are played either "as-input" or "as-output." Input and as-input measures reduce slack, whereas output and as-output measures increase slacks to attain their target on the production frontier.