Abstract
Internal resource waste refers to the waste in theintermediate resources between the upstreamstage and downstream stage in a production or service system. This study examines a systemwith a two-stage structure, in which the outputs from the first stage are taken as the inputs for thesecond stage. Two-stage systems can exist in centralized, decentralized, or mixed organizationalmodes. In this paper, we propose two-stage DEA models considering a degree of centralizationthat makes it possible to measure internal resourcewaste in different system modes. Somemanagerial insights are tested and verified from the perspective of efficiency analysis. We findthat: 1) when there is only one intermediate measure in a centralized two-stage system, internalresource waste can be eliminated completely, and 2)a higher degree of centralization in atwo-stage system can lead to less internal resourcewaste and more expected outputs. Finally, wepresent a numerical example and two practical real-world examples that illustrate our approachand findings.