Category: Frequently Asked Question

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 …

Continue reading

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.

While in the primal DEA model weights are associated with factors, each dual weight (so called because they are obtained as a result of  solving the dual DEA model ) is associated with a DMU. The value of the dual weight ? indicates the importance attributed to unit j in defining tlie input-output mix of the …

Continue reading

While the dual (CCR model) yields the same efficiency score as the primal model, it provides another way at looking at the same problem. Mathematically the dual may look more complex, but is much faster to solve as it has only as many constraints as there are factors. To  see if a unit is efficient …

Continue reading

In their original paper on OEA (Chanes et al 1978), the authors used this term to emphasise the fact that the focus was not on profit generating enterprises, but rather on decision making entities. Later on, DEA came to be applied to the private sector as well.

measure of the extent that the OEA model has succeeded in discriminating between the DMUs. The discriminatory power is directly related to the number of inefficient units. Since the efficiency measure is relative and at least one unit will always be efficient, OEA cannot discriminate between the whole field.

A unit is said to operate at decreasing returns to scale (DRS) if a proportionate increase in all of its inputs results in a less than proportionate increase in its outputs. If for a given DMU, the sum of the dual weights in the dual model (M2) is greater than 1, then that unit can …

Continue reading

This tool for interpreting the results consists of creating a table where the number of rows (j) and columns (j) equals the number of units in the analysis. For each cell (ij), the efficiency of unit jis computed with weights that are optimal to unit j. The higher the values in a given column j, …

Continue reading

Ensures that the region specified by a set of points (units) forms a convex set. The BCC model is obtained by simply adding a convexity constraint Sigma (Lambdas)=1 to the dual of the CCR model, which means that each composite unit is a convex combination of its reference units. For a dull discussion on convexity, …

Continue reading

The convex hull for a set of units (represented as points) is defined as the smallest convex polygon that encompasses all the points and is a further restriction on a convex cone. The envelopment surface specified by the BCC model results in a convex hull. See also: convex one.