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Π2.3 G. Koronakos, D. Despotis (2013). A novel DEA approach to assess individual and overall efficiencies in two-stage processes. 11th International Conference on Data Envelopment Analysis, Samsun, Turkey, June 27-30, 2013.

Abstract
In the DEA context, a two-stage production process assumes that the first stage
transforms external inputs to a number of intermediate measures, which then are used
as inputs to the second stage that produces the final outputs. In the additive approach,
the overall efficiency of the production process is defined as a weighted average of
the efficiencies of the individual stages. As the weights are assumed functions of the
DEA multipliers, they derive endogenously by the optimization process and are
different for each evaluated unit. In this paper, we first show that the above
assumption made for the weights unduly bias the efficiency assessments in favor of the
second stage and we present an unbiased approach to assess the efficiencies of the
two stages in an additive two-stage DEA framework. Then, we use the envelopment
variants of the individual stages as models to develop a two-phase procedure, which
enables the derivation of the efficient frontier at a minimum distortion of the
intermediate measures.