Int. J. Services and Operations Management, Vol. 6, No. 1, 2010 1 Exploring the impact of ‘intrinsic assurance regions’ in DEA on adding value in supply chains using ‘uniquely inefficient’ decision-making units P. Sunil Dharmapala Department of Operations Management & Business Statistics College of Commerce & Economics Sultan Qaboos University P.O. Box 20, Al-Khod 123 Muscat, Sultanate of Oman E-mail: sunilda@squ.edu.om Abstract: Data Envelopment Analysis (DEA) has been used in many studies to measure the efficiency of supply chains. There, the authors primarily utilised the traditional Charnes-Cooper-Rhodes (CCR) or Banker-Charnes-Cooper (BCC) model to measure the relative performance of Decision-Making Units (DMUs) in the supply chain. Dharmapala (2008) analysed Talluri and Baker’s (2002) data under the CCR model with Intrinsic Assurance Regions (IARs) and proposed a methodology to add value in supply chains by projecting inefficient DMUs onto the frontier. In this paper, we analyse the same data and explore the impact of IARs on the added values in supply chains using uniquely inefficient DMUs. Keywords: data envelopment analysis; DEA; inefficiency; intrinsic assurance regions; IARs; supply chain; adding value; uniquely inefficient DMUs. Reference to this paper should be made as follows: Dharmapala, P.S. (2010) ‘Exploring the impact of ‘intrinsic assurance regions’ in DEA on adding value in supply chains using ‘uniquely inefficient’ decision-making units’, Int. J. Services and Operations Management, Vol. 6, No. 1, pp.1–16. Biographical notes: Parakramaweera Sunil Dharmapala received his PhD in Business Administration from the University of Houston Business School, Houston, Texas, USA. His main area of research is performance measurement and enhancement using mathematical programming and statistics. His contributions in research have been published in reputed journals such as Journal of Productivity Analysis, Operations Research, European Journal of Operational Research, Computers and Operations Research, Annals of Operations Research, International Journal of Production Economics, Asia-Pacific Journal of Operational Research, International Journal of Applied Management Science and International Journal of Operational Research. 1 Introduction The studies in the literature, stated in Section 2, discuss the impact of Data Envelopment Analysis (DEA)-efficient Decision-Making Units (DMUs) and their contribution to supply chain efficiency. But none of those studies addressed the issue of adding value Copyright © 2010 Inderscience Enterprises Ltd.