Efficiency decomposition for general multi-stage systems in data envelopment analysis

Chiang Kao

Research output: Contribution to journalArticlepeer-review

102 Citations (Scopus)


Conventional data envelopment analysis (DEA) models only consider the inputs supplied to the system and the outputs produced from the system in measuring efficiency, ignoring the operations of the internal processes. The results thus obtained sometimes are misleading. This paper discusses the efficiency measurement and decomposition of general multi-stage systems, where each stage consumes exogenous inputs and intermediate products (produced from the preceding stage) to produce exogenous outputs and intermediate products (for the succeeding stage to use). A relational model is developed to measure the system and stage efficiencies at the same time. By transforming the system into a series of parallel structures, the system efficiency is decomposed into the product of a modification of the stage efficiencies. Efficiency decomposition enables decision makers to identify the stages that cause the inefficiency of the system, and to effectively improve the performance of the system. An example of an electricity service system is used to explain the idea of efficiency decomposition.

Original languageEnglish
Pages (from-to)117-124
Number of pages8
JournalEuropean Journal of Operational Research
Issue number1
Publication statusPublished - 2014 Jan 1

All Science Journal Classification (ASJC) codes

  • General Computer Science
  • Modelling and Simulation
  • Management Science and Operations Research
  • Information Systems and Management


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