Searching for alternatives to the closest targets: Identifying new directions for improvement while controlling additional efforts

José L. Ruiz and Inmaculada Sirvent

Journal of the Operational Research Society, 2021, vol. 72, issue 12, 2770-2782

Abstract: Setting the closest targets is an appropriate approach for planning. Closest targets minimize the gap between actual performances and best practices, so they are the ones that require the least effort from organizations for their achievement. However, this paper shows that, in practice, we can find alternative targets, which do not require significant additional efforts (with respect to those involved in the achievement of the closest ones) and define directions for improvement that might be more aligned with management. For this reason, we propose here to complement that approach with the search of alternative targets controlling additional efforts. In order to do so, a search algorithm based on some bi-objective Data Envelopment Analysis benchmarking models is developed, which allows us to explore the strong efficient frontier of the production possibility set while keeping the distance within some limits. Decision making is the core of planning, and involves the selection of a future course of action from alternatives for the purpose of improving performance. The proposed approach is thus consistent with those principles of planning, as it relies on the availability of alternatives, so that decision makers can make a choice through an ex post evaluation of potential ways for improvement.

Date: 2021
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DOI: 10.1080/01605682.2020.1819904

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