Sensitivity Analysis in Two-Stage DEA

Data envelopment analysis (DEA) is a method for measuring the efficiency of peer decision making units (DMUs) which uses a set of inputs to produce a set of outputs. In some cases, DMUs have a twostage structure, in which the first stage utilizes inputs to produce outputs used as the inputs of the second stage to produce final outputs. One important issue in two-stage DEA is the sensitivity of the results of an analysis to perturbations in the data. The current paper looks into combined model for two-stage DEA and applies the sensitivity analysis to DMUs on the entire frontier. In fact, necessary and sufficient conditions for preserving a DMU’s efficiency classification are developed when various data changes are applied to all DMUs.