Category: Frequently Asked Question

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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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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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.

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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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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The input and output values that would render an inefficient unit relatively efficient. Thanassoulis and Dyson (1992) examine ways of modifying the DEA model so as to set priorities over which targets should be improved. [Thanassoulis E and Dyson R G (1992) ‘Estimating preferred target input-output levels using data envelopment analysis’, J. of Opi. Res., …

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

Both ratio models rely on a radial or proportional measure as a DMU’s efficiency score depends on its proportional distance to the efficiency frontier

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

Yet another name for the efficiency frontier, this term emphasises the fact that each segment of the frontier represents the trade-off possibilities that can be made between the inputs or outputs of a given DMU on the isoquant segment while keeping the DMU efficient.