DEA Models for Parallel Systems: Game-Theoretic Approaches

In many settings, systems are composed of a group of independent sub-units. Each sub-unit produces the same set of outputs by consuming the same set of inputs. Conventional data envelopment analysis (DEA) views such a system as a "black-box", and uses the sum of the respective inputs and outputs of all relevant component units to calculate the system efficiency. Various DEA-based models have been developed for decomposing the overall efficiency. This paper further investigates this kind of structure by using the cooperative (or centralized) and non-cooperative (Stackelberg or leader-follower) game theory concepts. We show that the existing DEA approaches can be viewed as a centralized model that optimizes the efficiency scores of all sub-units jointly. The proposed leader-follower model will be useful when the priority sequence is available for sub-units. Consider, for example, the evaluation of relative efficiencies of a set of manufacturing facilities where multiple work shifts are operating. Management may wish to determine not only the overall plant efficiency, but as well, the performance of each shift in some priority sequence. The relationship between the system efficiency and component efficiencies is also explored. Our approaches are demonstrated with an example whose data set involves the national forests of Taiwan.