Measuring the efficiency of bi-level structured systems based on directional distance function and network DEA model

Document Type : Research Article

Authors

Mona Habibpoor

Mohammadreza Alirezaee

School of Mathematics and Computer Science, Iran University of Science and Technology, Narmak, Tehran, Iran.

10.22067/ijnao.2025.93541.1648

Abstract

‎In practical contexts, decision-making units (DMUs) are frequently organized hierarchically, encompassing various levels of functionality, multiple subunits across different tiers, or multiple stages of production. Traditional data envelopment analysis (DEA) models often neglect these hierarchical arrangements, potentially leading to assessments that do not accurately reflect actual unit performance. This study proposes a novel DEA model specifically designed to assess the efficiency of bi-level DMUs, consisting of a leader at the upper level and a follower at the lower level. By using a directional distance function, the proposed model simultaneously minimizes inputs and maximizes outputs, offering a more flexible and accurate evaluation compared to conventional methods. The model’s effectiveness is demonstrated through its application in two case studies within the banking sector, showcasing its ability to provide deeper managerial insights and improve decision-making.

Keywords

Network data envelopment analysis

Bi-level structures

Directional distance function

Efficiency

Banking industry

Subjects

• Operations Research

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