Abstract: “In recent years, a great number of Data Envelopment Analysis (DEA) studies have focused on Decision Making Units (DMUs) with two-stage structures, where all outputs from the first stage are intermediate products that are applied as the inputs of the second stage. In many situations, some inputs and outputs are shared between two stages. For this type of two-stage process, the conventional two-stage DEA models have some limitations e.g. efficiency formulation and linearizing transformation. In this paper, we introduce a relational DEA model for the two-stage process with shared inputs and outputs that the overall efficiency is illustrated as a convex combination of efficiencies of its two stages. The linearity of DEA models is preserved in our model. A numerical example of Malaysian Palm Oil refineries is used to explain the model.”

Keywords: data envelopment analysis; efficiency; two-stage; intermediate product; shared inputs and outputs.