Efficiency analysis in two-stage production systems with the presence of undesirable and reversible factors

To evaluate the efficiency in the two-stage production systems, some outputs of the second stage may be undesirable. Because the production of final undesirable outputs is far from the goals of decision-making units, the policy should be to reduce undesirable products. On the other hand, some of these undesirable outputs can be used as desirable input for the first stage. In this study, a model for calculating efficiency in the presence of undesirable and reversible factors for a two-stage network is presented. A case study in the field of performance evaluation of fourteen pharmaceutical companies listed on the Iranian Stock Exchange is used to describe the proposed model. In the financial statements of these companies, some financial ratios are considered undesirable reversible factors. To evaluate the efficiency in the two-stage production systems, some outputs of the second stage may be undesirable. Because the production of final undesirable outputs is far from the goals of decision-making units, the policy should be to reduce undesirable products. On the other hand, some of these undesirable outputs can be used as desirable input for the first stage. In this study, a model for calculating efficiency in the presence of undesirable and reversible factors for a two-stage network is presented. A case study in the field of performance evaluation of fourteen pharmaceutical companies listed on the Iranian Stock Exchange is used to describe the proposed model. In the financial statements of these companies, some financial ratios are considered undesirable reversible factors.