Efficiency measurement for hierarchical network systems

Chiang Kao

Research output: Contribution to journalArticlepeer-review

42 Citations (Scopus)


The conventional data envelopment analysis (DEA) models for measuring the relative efficiency of a set of decision making units (DMUs), without considering the operations of the component processes, often produce misleading results, and network models have thus been recommended. This paper discusses the development of a network DEA model for systems with a hierarchical structure. It is shown that the hierarchical structure is equivalent to a parallel structure, with the components being the units at the bottom of the hierarchy. Due to the characteristics of a parallel system, the efficiency of a hierarchical system is thus a weighted average of those of the units at the bottom of the hierarchy. A hypothetic example shows that the proposed model is able to distinguish the order of the efficient DMUs evaluated by the conventional DEA model. Moreover, it provides the efficiencies of the functions of the DMU, which enables managers to identify areas of weakness, and thus better focus efforts to improve overall performance.

Original languageEnglish
Pages (from-to)121-127
Number of pages7
JournalOmega (United Kingdom)
Publication statusPublished - 2015 Mar 1

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research
  • Information Systems and Management


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