Supply chain DEA: production possibility set and performance evaluation model

Abstract

Performance evaluation is of great importance for effective supply chain management. The foundation of efficiency evaluation is to faithfully identify the corresponding production possibility set. Although a lot of researches have been done on supply chain DEA models, the exact definition for supply chain production possibility set is still in absence. This paper defines two types of supply chain production possibility sets, which are proved to be equivalent to each other. Based upon the production possibility set, a supply chain CRS DEA model is advanced to appraise the overall technical efficiency of supply chains. The major advantage of the model lies on the fact that it can help to find out the most efficient production abilities in supply chains, by replacing or improving inefficient subsystems (supply chain members). The proposed model also directly identifies the benchmarking units for inefficient supply chains to improve their performance. A real case validates the reasonableness and acceptability of this approach.