Research On Efficiency Evaluation And Fixed Cost Allocation Of Two-Stage System With Undesirable Intermediate Outputs

In real life,many production systems can be described as a typical two-stage process,in which the first stage carries on the traditional production activities and produces some undesirable by-products,while the second stage mainly obtains value by dealing with these by-products.How to measure the efficiency of two-stage production systems with undesirable intermediate outputs has become a natural and significant issue with the attention of environmental issues in production.Most of the existing two-stage Data Envelopment Analysis(DEA)studies treat undesirable outputs as the final outputs of the second stage,and how to evaluate the efficiency of a two-stage system with undesirable intermediate outputs has become a problem to be solved.Besides,in addition to input and output indicators,there will be some common costs that need to be shared among Decision Making Units(DMUs),such as the construction costs of information systems,advertising costs and technical upgrading costs.Because it is difficult to accurately measure the benefits of these costs,they cannot be allocated directly among DMUs.Most of the existing fixed cost allocation studies treat DMUs as a "black box",ignoring its internal structure information,which will lead to misleading allocation scheme.However,the existing fixed cost allocation studies that consider the internal structure of the system mostly discuss the most basic two-stage system structure without additional input and output.In reality,two-stage systems are often more complex.How to allocate fixed costs under a more complex two-stage system structure has become a hot issue to be studied in the DEA field.Therefore,this paper proposes a new two-stage DEA method considering undesirable intermediate outputs.After using simulation experiments to verify the validity of our proposed method,the method is applied to research on the efficiency of production and pollution treatment in 30 provincial regions of China and some policy recommendations have been made.In addition,we consider the fixed cost to be apportioned in the two-stage structure,and consider the efficiency of sub-stage and input-output scale to get a cost allocation method.Similarly,we used the two-stage system of production and pollution treatment in 30 provincial regions of China as the application background,and applied this cost allocation method to practice,which solved the problem of the allocation of the technical upgrading cost among these regions.