A note on efficiency decomposition in two‐stage data envelopment analysis

Data envelopment analysis (DEA) is a useful tool of efficiency measurement for firms and organizations. take into account the series relationship of the two sub‐processes in a two‐stage production process, and the overall efficiency of the whole process is the product of the efficiencies of the two sub‐processes. To find the largest efficiency of one sub‐process while maintaining the maximum overall efficiency of the whole process, propose a solution procedure to accomplish this purpose. Nevertheless, one needs to know the overall efficiency of the whole process before calculating the sub‐process efficiency. In this note, we propose a method that is able to find the sub‐process and overall efficiencies simultaneously.