TY - CHAP
T1 - Scale efficiency measurement in two-stage production systems
AU - Kao, Chiang
AU - Hwang, Shiuh Nan
N1 - Publisher Copyright:
© Springer Science+Business Media New York 2014.
PY - 2014
Y1 - 2014
N2 - One important objective in measuring efficiency is to find the factors that cause inefficiencies so that its performance can be improved. The conventional data envelopment analysis approach is able to decompose the overall efficiency of a system into the product of the technical and scale efficiencies when the internal structure is ignored. For two-stage systems, where the inputs are supplied to the first process to produce intermediate products for the second process to produce the final outputs, the system efficiency can be decomposed into process efficiencies. This paper further decomposes each process efficiency into the product of the technical and scale efficiencies via an input-oriented model for the first process and an output-oriented one for the second. The decomposition also reveals that the overall efficiency of the two-stage system, when the operations of the two processes are considered, is still the product of the technical and scale efficiencies. The concept is illustrated using an example of 24 non-life insurance companies in Taiwan.
AB - One important objective in measuring efficiency is to find the factors that cause inefficiencies so that its performance can be improved. The conventional data envelopment analysis approach is able to decompose the overall efficiency of a system into the product of the technical and scale efficiencies when the internal structure is ignored. For two-stage systems, where the inputs are supplied to the first process to produce intermediate products for the second process to produce the final outputs, the system efficiency can be decomposed into process efficiencies. This paper further decomposes each process efficiency into the product of the technical and scale efficiencies via an input-oriented model for the first process and an output-oriented one for the second. The decomposition also reveals that the overall efficiency of the two-stage system, when the operations of the two processes are considered, is still the product of the technical and scale efficiencies. The concept is illustrated using an example of 24 non-life insurance companies in Taiwan.
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U2 - 10.1007/978-1-4899-8068-7_6
DO - 10.1007/978-1-4899-8068-7_6
M3 - Chapter
AN - SCOPUS:84955159050
T3 - International Series in Operations Research and Management Science
SP - 119
EP - 135
BT - International Series in Operations Research and Management Science
PB - Springer New York LLC
ER -