Optimal budget for system design series network DEA model

Wei and Chang (2011a) developed optimal system design (OSD) data envelopment analysis (DEA) models to design a decision-making unit (DMU)’s optimal system, in which the DMU could encounter the well-known economic phenomenon of budget congestion. To show how to verify the optimal budget and budget congestion, they develop a solution method. In this paper, we note that their method is incorrect for the OSD network DEA model in general. A new approach is developed to derive the DMU’s corresponding optimal budgets and to check for the existence of budget congestion not only for the OSD DEA models but also for the OSD network DEA models. In addition, the proposed approach is computationally economical. Finally, two numerical examples are used to illustrate the proposed approach.