Introduction a method of determining returns to scale in network data envelopment analysis

Abstract

In the process of evaluating the Decision Making Units, two factors of efficiency and production size can be used. When the production size of a unit is not optimal, its Returns To Scale (RTS) determines that changing the resources in anotherdirection would enhance its productivity. In most previous research, RTS is considered to be increasing or decreasing, and frontier analysis is used to determine it. The concept of RTS in Network Data Envelopment Analysis (DEA) is so interesting. In this paper a method based on Most Productive Scale Size (MPSS) in several steps is developed, in addition to determining that RTS of units for each unit in directional manner, the shortest changes in resources for achieving the right size for network production is also obtained. In this approach, the computational complexity, and the ambiguity in units RTS is not present.

Keywords

• data envelopment analysis
• network data envelopment analysis
• returns to scale
• efficiency
• most productive scale size