Bi‐level Programing Merger Evaluation and Application to Banking Operations. Issue 3 (21st March 2014)

• Record Type: Journal Article
• Authors: Wu, Desheng Dash; Luo, Cuicui; Wang, Haofei; Birge, John R.
• Other Names: Choi Tsan‐Ming guestEditor.; Cheng T. C. E. guestEditor.; Zhao Xiande guestEditor.
• Is Part Of: Production and operations management. Volume 25:Issue 3(2016)
• Page Start: 498
• Page End: 515
• Publication Date: 2014-03-21
• Subjects: series chain -- merger -- bi‐level programing -- DEA -- incentive compatible -- banking operations -- risk -- multi‐methodological approach; Production management -- Periodicals; 658.505
• DOI: 10.1111/poms.12205
• Languages: English
• ISSNs: 1059-1478

Abstract

Abstract : 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.