Dynamic Average-Cost Efficiency and Optimal Scale Sizes

Detecting optimum scale sizes of firms could be a criticalperspective for directors on account of the changes of inputand output measures. Moreover, there are carryovers inmany processes. In the prevailing data envelopmentanalysis (DEA), optimal scale sizes (OSSs), average-costefficiency (ACE) and average-revenue efficiency (ARE) ofdecision making units (DMUs) have been determined in aspecial period of time whilst we confront with dynamicprocesses in some examinations. Accordingly, in this study,OSSs and ACE of DMUs containing carryovers are tackled.Dynamic ACE is defined as the composite of dynamic scaleand input allocative efficiencies. To clarify, a two-phasedynamic DEA-based technique is developed to examinedynamic ACE and OSSs. A numeric example is presented toillustrate the proposed technique in this research.

Keywords:

Dynamic Data Envelopment Analysis , DynamicAverage-Cost Efficiency , Optimal Scale Size , Carry-over.