Integrated AHP and network DEA for assessing the efficiency of Iranian handmade carpet industry

Abstract

Data envelopment analysis (DEA) is a method for measuring the efficiency of peer decision making units (DMUs). Traditional DEA models deal with measurements of relative efficiency of DMUs regarding multiple-inputs vs. multiple-outputs. One of the drawbacks of these models is the neglect of intermediate products or linking activities. Recently, DEA has been extended to examine the efficiency of network structures, where there are lots of sub-processes that are linked with intermediate parameters. These intermediate parameters can be considered as the outputs of the first stage and simultaneously as the inputs for the second stage. In contrast to the traditional DEA analysis, network DEA analysis aims to measure different sub-processes’ efficiencies in addition to the total efficiency. Lots of network DEA technique has been used recently, but none of them uses Analytic Hierarchy Process (AHP) in network DEA for assessing a network’s efficiency. In this paper, AHP methodology is used for considering the importance of each sub-process and network DEA is used for measuring total and partial efficiencies based on the importance of each department measured from AHP methodology. In this regard, the case of Iranian Handmade Carpet Industry (IHCI) is used.

Keywords

• Analytic hierarchy process
• Network data envelopment analysis
• Efficiency
• Iranian handmade carpet industry