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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Another name for weights

Same as exogenously fixed factor.

Short for decision making unit or DMU.

Any unit that is part of a reference set

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

Tabular method for examining the changes in the efficiencies of a set of units over time. A set of time periods (1 ..t) is chosen and the efficiency of each unit (1..n) is computed separately for each period so that the efficiency of a given unit over each period is treated as a new unit …

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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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Virtual input is obtained for each input by taking the product of the input’s value and its corresponding optimal weight as given by the solution to the primal model. Virtual outputs are obtained analogously. A virtual input or output describes the importance attached to the given factor. The virtual inputs always add up to the …

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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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