Performance Evaluation of Supply Chain under Decentralized Organization Mechanism

Abstract Nowadays among many evaluation methods, data envelopment analysis has widely used to evaluate the relative performance of a set of Decision Making Units (DMUs). Data Envelopment Analysis (DEA(is a mathematical tool for evaluating the relative efficiency of a set Decision Making Units (DMUs), with multiple inputs and outputs. Traditional DEA models treat with each DMU as a “black box" thus, the performance measurement may be not effective. So, there are necessities for network DEA models. The objective of this paper is to propose a new network DEA model for measuring the efficiency of two- supplier and one manufacturer chains under the decentralized organization mechanism. In this mechanism, each section of supply chain is controlled under unique decision maker with his/her own interest. We proposed that, in comparison with CCR model, for the supply chain under decentralized organization mechanism, it is not appropriate to ignore the internal structure and treat as a “black box”, while there is more than one decision maker with different interests. Furthermore, the relation between the supply chain efficiency and division efficiency is investigated. Numerical example demonstrates the application of the proposed model.