Optimal input/output reduction in production processes

While conventional Data Envelopment Analysis (DEA) models set targets for each operational unit, this paper considers the problem of input/output reduction in a centralized decision making environment. The purpose of this paper is to develop an approach to input/output reduction problem that typically occurs in organizations with a centralized decision-making environment. This paper shows that DEA can make an important contribution to this problem and discusses how DEA-based model can be used to determine an optimal input/output reduction plan. An application in banking sector with limitation in IT investment shows the usefulness of the proposed method.

► In centralized decision making environment, reduction in input/output involve the participation of all DMUs, each contributing in part to total consumption or production.
► This study focused on a decision-making environment in which a CDM controls the inputs/outputs of the units and there could be some limitations of the availability of resources.
► A procedure to determine an optimal reduction in inputs/outputs while improving the total efficiency of CDM has been adopted.
► A MOLP problem is designed to the input/output reduction problem.