System efficiency evaluation of homogeneous parallel production systems: An aggregation approach

Abstract

Existing models, for efficiency evaluation of DMUs with homogeneous parallel production-units, have limitations in the sense that production process of a DMU is compared with the production possibility set of all production-units. Moreover, same set of input-output weights is used to evaluate the efficiency, project inputs-outputs of a DMU and all its production-units. This means, all the production-units of a DMU operate in a similar way in the long run as if they are not separate production-units but one single entity. We propose an aggregation approach to evaluate the efficiency of DMUs with homogeneous parallel production-units. We also introduce Weighted Average Efficiency and System Efficiency. As opposed to the existing methodology, different set of weights are used to evaluate efficiency of different production-units of a DMU. Finally, the proposed methodology has been used to evaluate the efficiency of higher education sector of Bihar, one of the largest states in India.