Multi-period efficiency and Malmquist productivity index in two-stage production systems

Chiang Kao, Shiuh Nan Hwang

Research output: Contribution to journalArticlepeer-review

77 Citations (Scopus)

Abstract

Conventional two-stage data envelopment analysis (DEA) models measure the overall performance of a production system composed of two stages (processes) in a specified period of time, where variations in different periods are ignored. This paper takes the operations of individual periods into account to develop a multi-period two-stage DEA model, which is able to measure the overall and period efficiencies at the same time, with the former expressed as a weighted average of the latter. Since the efficiency of a two-stage system in a period is the product of the two process efficiencies, the overall efficiency of a decision making unit (DMU) in the specified period of time can be decomposed into the process efficiency of each period. Based on this decomposition, the sources of inefficiency in a DMU can be identified. The efficiencies measured from the model can also be used to calculate a common-weight global Malmquist productivity index (MPI) between two periods, in that the overall MPI is the product of the two process MPIs. The non-life insurance industry in Taiwan is used to verify the proposed model, and to explain why some companies performed unsatisfactorily in the specified period of time.

Original languageEnglish
Pages (from-to)512-521
Number of pages10
JournalEuropean Journal of Operational Research
Volume232
Issue number3
DOIs
Publication statusPublished - 2014 Feb 1

All Science Journal Classification (ASJC) codes

  • Computer Science(all)
  • Modelling and Simulation
  • Management Science and Operations Research
  • Information Systems and Management

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