DEA Models For Supply Chain or Multi-Stage Structure

Abstract

Standard data envelopment analysis (DEA) models cannot be used directly to measure the performance of a supply chain and its members, because of the existence of the intermediate measures connecting those members. This observation is true for any situations where DMUs contain multi-stage processes. This chapter presents several DEA-based approaches in a seller-buyer supply chain context. Some DEA models are developed under the assumption that the relationship between the seller and buyer is treated as leader-follower and cooperative, respectively. In the leader-follower (or non-cooperative) structure, the leader is first evaluated using the standard DEA model, and then the follower is evaluated by a new DEA-based model which incorporates the DEA efficiency information for the leader. In the cooperative structure, one maximizes the joint efficiency that is modeled as the average of the seller’s and buyer’s efficiency scores, and both supply chain members are evaluated simultaneously.