Returns to scale and scale elasticity in two-stage DEA (Q1649199)

Summary: Data Envelopment Analysis (DEA) provides a method to evaluate the relative efficiency of peer Decision Making Units (DMUs) that have multiple inputs and outputs. Production process in two-stage DEA is performed in the two consecutive phases and DMUs have intermediate measures, in addition to their inputs and outputs. A unique feature of the intermediate measures is that the outputs in the first stage are being treated as inputs in the second stage. The aim of this paper is to determine the returns to scale (RTS) classification and scale elasticity (SE) in two-stage DEA. Therefore an approach is introduced for estimating the RTS situation of DMUs with two-stage structure based on the consideration of SE quantity in each of the individual stages. The utilization of the proposed approach is demonstrated with a real data set.