Data Envelopment Analysis in Three-Stage Network Structure with Slack Based Measure (SBM)

Abstract

Data envelopment analysis (DEA) is a powerful non-parametric technique for measuring and analyzing the relative efficiency of a Decision-Making Unit (DMU) with multiple homogeneous types of inputs and outputs. Traditional DEA treats a DMU as a black box and calculates its efficiency by considering its initial inputs and final outputs. But the overall efficiency of a DMU is directly dependent upon the performances of intermediate operations of a production process. In many situations, DMUs have a three-stage network structure. Against this backdrop, this paper introduces a non-oriented and non-radial slacks-based measure (SBM) of an efficiency framework for the three-stage network production process. In the proposed model, we have considered both series and parallel relationships between the inputs and outputs of different independent and dependent stages. Additionally, this research is aimed at measuring banking efficiency by using a three-stage network DEA model