Efficiency measurement for parallel production systems

Abstract

In the real world there are systems which are composed of independent production units. The conventional data envelopment analysis (DEA) model uses the sum of the respective inputs and outputs of all component units of a system to calculate its efficiency. This paper develops a parallel DEA model which takes the operation of individual components into account in calculating the efficiency of the system. A property owned by this parallel model is that the inefficiency slack of the system can be decomposed into the inefficiency slacks of its component units. This helps the decision maker identify inefficient components and make subsequent improvements. Another property is that the efficiency calculated from this model is smaller than that calculated from the conventional DEA model. Few systems will have perfect efficiency score; consequently, a stronger discrimination power is gained. In addition to theoretical derivations, a case of the national forests of Taiwan is used as an example to illustrate the whole idea.