Measuring the cost efficiency in NDEA

Data Envelopment Analysis (DEA) is a relatively new data oriented approach for evaluating the performance of a set of peer entities called Decision-Making Units (DMUs) which convert multiple inputs into multiple outputs. In a relatively short period of time DEA has grown into a powerful quantitative, analytical tool for measuring and evaluating performance. DEA has been successfully applied to a host of different types of entities engaged in a wide variety of activities in many contexts worldwide. The issue of measuring the cost efficiency in manufacturing and economic systems is one of the most important issues in the world. In the real world, there are manufacturing and economic systems that are composed of independent units. One of the ways to measure the cost efficiency for economic and production systems is the DEA technique. This paper presents two network DEA models to measure the cost efficiency of a network model with identical processing components taking into account the individual processing functions in the network structure. In this paper, we examine the cost efficieny model of Färe et al., and through modifying the model of Färe et al., a model has been developed to measure the cost efficiency in economic and manufacturing networks.