SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

Abstract: This paper presents a network model incorporating customer satisfaction into efficiency and productivity measures. The network consists of a production node and a consumption node and offers flexibility in modelling the production and consumption process. Allocation of input resources to production and customer oriented activities is allowed. In the consumption process inputs and output characteristics result in customer satisfaction. The model solution identifies optimal allocation of resources between production and customer oriented activities. Data envelopment analysis estimators of the defined theoretical measures of efficiency and productivity are presented. An empirical application using data from a sample of Swedish pharmacies is included. Results from the network model and a direct productivity model indicate increased average productivity, although the productivity progress is somewhat lower in the network model.

Keywords: Customer satisfaction; data envelopment analysis; distance function; Malmquist productivity index; network model

JEL-codes: D11; D12; D24

12 pages, December 1996

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Published as

Mickael Löthgren and Magnus Tambour, (1999), 'Productivity and Costumer Satisfaction - A DEA Network Model', European Journal of Operational Research, vol 115, pages 449-458

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