Category Archive: Frequently Asked Question

BCC

Introduced by Banker, Chames and Cooper (1984), this model measures technical efficiency as the convexity constraint ensures that the composite unit is of similar scale size as the unit being measured. The resulting efficiency is always at least equal to the one given by the CCR model, and those DMUs with the lowest input or …

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Production function

Given a set of inputs that produce outputs, the production function defines an optimum relationship for producing the maximal amount of output from the given inputs. The DEA equivalent of the production function is the efficiency frontier which is based on empirical data (inputs and outputs). See Chames et al (1981) for details and more …

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Projected point

Refers to an inefficient DMU’s composite unit to emphasise that geometrically it involves the projection of the inefficient DMU onto the efficiency frontier (Ali and Seiford 1993). [Ali A and Seiford L (1993), ‘The mathematical programming approach to efficiency analysis’, in: Fried H, Knox C A K and Schmidt S (editors), The measurement of productive …

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Virtual multipliers

Another name for weights

Output

A factor which describes the amount of goods, services or other outcome obtained as a result of the processing of resources. Also, any factor which describes the qualitative nature of the resulting outcome.

Overall efficiency

Same as aggregate efficiency

Unit

Short for decision making unit or DMU.

Output-oriented

In an output-oriented model, an inefficient unit is made efficient through the proportional increase of its outputs, while the inputs proportions remain unchanged.

Isotonicity

The requirement that the relationship between inputs and outputs not be erratic. Increasing the value of any input while keeping other factors constant should not decrease any output but should instead lead to an increase in the value of at least one output.

Multiplier form

Associated with each DEA model type (eg CCR, BCC) is both a primal and dual formulation. To avoid confusion over which formulation is primal and which dual, the multiplier form is always understood to refer to the formulation involving virtual multipliers (Ali and Seiford 1993). [Ali A and Seiford L (1993), ‘The mathematical programming approach …

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