Performance Measurement and Productivity Management in Production Units with Network Structure by Identification the Most Productive Scale Size Pattern

Managers tend to improve the use of resources (inputs) of organizations to obtain the most productivity. Additionally, many industrial units have multi-stage structure in which the output of one stage is the input to the next stage. This paper, for the first time, presents data envelopment analysis (DEA) approaches to obtain the most productivity in two-stage decision making units (DMUs). Radial and non-radial models, by considering internal activities in system, are proposed to evaluate network DMUs and radial model is developed to identify most productive scale size (MPSS) pattern. Proposed models are applied to optimize the performance of bank branches as units with two-stage structure. Results show efficiency scores and also improvements are needed in costs and paid interests (inputs) to get values of incomes and loans (outputs) which results in the most productivity. This study provides managers with information to propose better strategies to improve not only the overall performance but also the efficiency of each stage.