Investigating the Sustainability of Return to Scale Classification in a Two‐Stage Network Based on DEA Models

Abstract

Purpose. The purpose of this study is to sensitivity analysis analyze the returns to scale in two-stage network based on DEA models. The main focus of the firms has always been to obtain the maximum output with the least available resources, which points to the improvement of the firm’s performance and the importance of returns to scale and technical improvement. Design/Methodology/Approach. This study examines the sensitivity of returns to scale classifications in a two-stage DEA network. A new input-oriented model was progressed to identify the efficient decision-making units in the two-stage network, after which a new method of determining the returns to scale classifications in the efficient DMUs in two-stage network (constant, increasing, or decreasing returns to scale) was established. Findings. The stability of the returns to scale classifications in the two-stage network was analyzed. A stability region for changes in primary inputs and final outputs is only determined especially for DMUs that are efficient so that it maintains the classification of the returns to scale units. The results are shown by numerical examples. Practical Implications. The sensitivity analysis of returns to scale classifications is one of the most significant issues in data envelopment analysis (DEA), which plays an essential role in management decisions. Originality/Value. Using this model can help improve the performance of companies by using new tools and also improve the quality of work and increase acceptance competition.