Category Archive: Frequently Asked Question

Weight Flexibility

As the CCR primal model places no restriction on the weights other than a lower bound of epsilon, it is not rare for a unit to be rated efficient at the expense of having a very uneven distribution of weights where some or most of the factors have been practically ignored. To remedy the situation, …

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Ordinal variable

A factor which consists of a set of predefined values that are ranked in a specific order. An ordinal variable can be seen as a special case of a categorical variable. If the values of an ordinal factor need to be scaled, the inherent order must be preserved (Cook et al 1993). [Cook W, Kress …

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Peer group

Another name for reference set

Primal (CCR) model

The primal model allows the DMU being measured to determine the set of optimal weights for each of its factors (outputs are denoted by y. and inputs by x in the following model) so as to maximise its efficiency. The solution consists of a set of weights (for outputs and y for inputs) chosen so …

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Units invariance

The efficiency scores of the DEA ratio models are independent of the units in which the factors are measured. The input and output values can thus be scaled through multiplication by a constant as proven in Chames and Cooper (1985). [Charnes A, Cooper W W (1985) ‘Preface to topics in data envelopment analysis’, in Thompson …

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Non-naturally enveloped unit

Bessent et al (1988) coined this term (later simply known as unenveloped units) to refer to those inefficient units that are not fully enveloped by the efficiency frontier. To be fully enveloped in the CCR model, an inefficient DMU needs to have (m+n) -1 reference units where m+n denotes the number of factors. Unenveloped units …

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Outlier

Generally taken to mean an odd unit with an input-output mix that significantly differs from the rest of the units. This can be due to a measurement error, or as a result of the outlier having different operating practices. Outliers that are efficient can introduce bias into the analysis. See Epstein and Henderson (1989). [Epstein …

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Visualisation

The process of developing a set of visual techniques such as graphs and charts through which the DEA results can be better understood.

Scale of operations

The so-called ‘size’ of the DMU, it may be associated with either the inputs or the outputs, depending on the situation.

Scale efficiency

A unit is said to be scale efficient when its size of operations is optimal so that any modifications on its size will render the unit less efficient. The value for scale efficiency is obtained by dividing the aggregate efficiency by the technical efficiency.

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