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Category: Frequently Asked Question

Environmental factor

While in the strictest sense all factors depend on their environment, an input or output factor that purposefully attempts to make up for the inherent differences in the DMIJs being analysed is generally referred to as an environmental factor. The larger the field, the more probable that some units have intrinsic advantages over others. Environmental …

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Homogeneity

Refers to the degree of similarity between the units in the field. Only units that bear some similarities in their operational goals should be included in the same field, otherwise the results may be biased.

Input/output mix

The proportions in which a unit’s input/output values are combined.

Facet

In higher dimensions, the segments forming the efficiency frontier are known as facets.

Efficiency score

Efficiency is measured on a scale of 0 to 1, where a value of I indicates the unit is relatively efficient, and a value less than 1 indicates the unit is inefficient. The efficiency score of a unit will vary according to the factors and DMUs included in the analysis. In the early days of …

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Input

Any factor used as a resource by the DMU for producing something of value.

Efficiency/Productive efficiency

A measure of a unit’s ability to produce outputs from its set of inputs. Since the efficiency of a given DMU is measured with respect to other DMUs in the field, the obtained efficiency is always relative. From the standpoint of the efficiency frontier, an enveloped unit’s efficiency is related to its radial distance from …

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Exogeneously fixed factor

An input or output that is beyond the control of the DMU manager. A fast-food restaurant may have an input such as years of operations, that it cannot control and hence the unit cannot improve its efficiency by reducing that input.

Envelopment form

A DEA model formulation involving the concept of a composite unit. The term ‘envelopment’ stresses the fact that a composite unit is a combination of efficient units enveloping an inefficient unit.

Input-oriented

A term used in conjunction with the ratio models to indicate that an inefficient unit is made efficient through the proportional reduction of its inputs while its outputs proportions are held constant. While the CCR model yields the same efficiencies regardless of whether it is input or output-oriented, this is not so with the BCC …

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