Efficiency evaluation model with constraint resource: an application to banking operations

Competition is often presented in a free market. Efficiency evaluation of decision‐making units (DMUs) needs accommodation of such competition among various units due to constrained resources. This paper develops an innovative quantitative approach to address the above‐mentioned performance evaluation problem with constrained resource using output‐oriented DEA. The proposed model allows DMUs to identify the maximum input reduction and resource savings to achieve performance improvement. Relations between the proposed model and classical output‐oriented DEA models are explored and some economic insights are derived from these models. The proposed approach is validated by use of computational examples.