Performance evaluation in a two-stage network-DEA with intermediate products

Abstract

The main difference between conventional data envelopment analysis (DEA) and network data envelopment analysis (NDEA) lies in the internal structure of a decision-making unit (DMU). Most of the existing NDEA methodologies neglect to address the issue of incorporating the influence of the intermediate, directly in the objective function. To overcome this shortcoming, in this paper, based on the feature of the SBM model, the researcher is setting an NSBM model for evaluating the overall efficiency score by using two steps in a generic two-stage structure. For this reason, firstly, the researcher solves an additive model (ADD) for finding the amount of the optimal value of the intermediate measures. While in the second step, in our modified NSBM model, the researcher has incorporated the optimal value of the objective function which is introduced. So, our sole contribution will be presenting a model for finding overall efficiency and calculating the unique value for stage efficiencies, input, the intermediate and output-oriented efficiency, which is an essential issue in the network research area. Finally, a numerical example of 30 US commercial banks from Chen et al. (2016) are provided for verifying our proposed approach.