Bi‐level Programing Merger Evaluation and Application to Banking Operations

The potential for operational efficiency improvement is a key consideration for firms contemplating the consolidation of both internal and external business units. This paper develops a leader–follower game model to assess such potential gains from the merger of different organizations with constrained resources. A profit‐sharing strategy and algorithm are proposed to solve the model while maintaining incentive compatibility within each unit's decision‐making process. This paper further demonstrates that in a framework, within the data envelopment analysis paradigm, a supply chain with an upstream leader and downstream followers is efficient if and only if both the leader and the followers are individually efficient. A case study of a banking operations merger shows how incentive compatible merger of operations can produce overall efficiency improvement.

• 저널Production and Operations Management · 25(3) · 498–515
• 토픽Efficiency Analysis Using DEA · Management Science and Operations Research
• DOI10.1111/poms.12205
• 저자Desheng Wu, Cuicui Luo, Haofei Wang, John R. Birge