Proportional trade-offs in network DEA

This paper proposes a network Data Envelopment Analysis (DEA) framework for incorporating value-judgments in the form of production trade-offs, in order to, in detail, analyze the synchronized variations in the flows of production (input/output) factors among different divisions or sub-divisions. The notion of production trade-offs can be formulated in two ways: absolute trade-off model and proportional trade-off model. The current study adopts the proportional trade-off formulation, which has several desirable features compared to the existing formulations from the viewpoint of theory and practice, and introduces a new notion, called network proportional trade-offs (NPTO). The NPTO notion plays a key role in the development of the proposed network DEA framework. An application for the NPTO problem of an oil holding company is provided to demonstrate the applicability of the proposed framework.

Automated summary

This paper presents a network DEA framework that incorporates value judgments into production analysis, using a proportional trade-off model and introducing the concept of network proportional trade-offs. The author demonstrates the practical application of the framework through a case study of an oil holding company.