TY - JOUR
T1 - Efficiency decomposition in two-stage data envelopment analysis
T2 - An application to non-life insurance companies in Taiwan
AU - Kao, Chiang
AU - Hwang, Shiuh Nan
N1 - Funding Information:
This research is supported by the National Science Council, Republic of China, under contract number: NSC95-2416-H-006-026-MY3. The authors are grateful to Dr. Wen-Shiang Wu for his help in calculating the efficiencies.
PY - 2008/2/16
Y1 - 2008/2/16
N2 - The efficiency of decision processes which can be divided into two stages has been measured for the whole process as well as for each stage independently by using the conventional data envelopment analysis (DEA) methodology in order to identify the causes of inefficiency. This paper modifies the conventional DEA model by taking into account the series relationship of the two sub-processes within the whole process. Under this framework, the efficiency of the whole process can be decomposed into the product of the efficiencies of the two sub-processes. In addition to this sound mathematical property, the case of Taiwanese non-life insurance companies shows that some unusual results which have appeared in the independent model do not exist in the relational model. In other words, the relational model developed in this paper is more reliable in measuring the efficiencies and consequently is capable of identifying the causes of inefficiency more accurately. Based on the structure of the model, the idea of efficiency decomposition can be extended to systems composed of multiple stages connected in series.
AB - The efficiency of decision processes which can be divided into two stages has been measured for the whole process as well as for each stage independently by using the conventional data envelopment analysis (DEA) methodology in order to identify the causes of inefficiency. This paper modifies the conventional DEA model by taking into account the series relationship of the two sub-processes within the whole process. Under this framework, the efficiency of the whole process can be decomposed into the product of the efficiencies of the two sub-processes. In addition to this sound mathematical property, the case of Taiwanese non-life insurance companies shows that some unusual results which have appeared in the independent model do not exist in the relational model. In other words, the relational model developed in this paper is more reliable in measuring the efficiencies and consequently is capable of identifying the causes of inefficiency more accurately. Based on the structure of the model, the idea of efficiency decomposition can be extended to systems composed of multiple stages connected in series.
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U2 - 10.1016/j.ejor.2006.11.041
DO - 10.1016/j.ejor.2006.11.041
M3 - Article
AN - SCOPUS:34548702436
SN - 0377-2217
VL - 185
SP - 418
EP - 429
JO - European Journal of Operational Research
JF - European Journal of Operational Research
IS - 1
ER -