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Gradual merging of decision-making units to achieve Pareto efficiency
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Hassan Rostamzadeh *   , Ali Reza Fakharzadeh |
| Department of Mathematics, University of Technology, Shiraz, Iran , h.rostamzadeh@sutech.ac.ir |
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Abstract: (26 Views) |
Existing merger approaches in data envelopment analysis integrate decision-making units in a single stage, but in practice, merging units may not be possible or affordable at once. We propose a finite multi-stage framework for the gradual merger of decision-making units that incorporates practical constraints. The model determines input and output contributions of the merged units at each stage and constructs a strictly increasing efficiency sequence that converges to a Pareto-efficient state. Each new unit is optimized using both input and output orientation while preserving a uniform return to scale type across stages. The framework is validated through a multi-stage merger application on a subset of Iranian banks.
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| Keywords: DEA, efficiency, gradual merger, return to scale, Pareto efficiency. |
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Full-Text [PDF 758 kb]
(9 Downloads)
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Type of Study: Original |
Subject:
Mathematical Modeling and Applications of OR
Received: 2026/04/21 | Accepted: 2026/06/5 | Published: 2026/06/5
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