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A linear programming approach to efficiency evaluation in nonconvex metatechnologies

Mohsen Afsharian and Victor V. Podinovski

European Journal of Operational Research, 2018, vol. 268, issue 1, 268-280

Abstract: The notions of metatechnology and metafrontier arise in applications of data envelopment analysis (DEA) in which decision making units (DMUs) are not sufficiently homogeneous to be considered as operating in the same technology. In this case, DMUs are partitioned into different groups, each operating in the same technology. In contrast, the metatechnology includes all DMUs and represents all production possibilities that can in principle be achieved in different production environments. Often, the metatechnology cannot be assumed to be a convex set. In such cases, benchmarking a DMU against the common metafrontier requires implementing either an enumeration algorithm and solving a linear program at each of its steps, or solving an equivalent mixed integer linear program. In this paper we show that the same task can be accomplished by solving a single linear program. We also show that its dual can be used for the returns-to-scale characterization of efficient DMUs on the metafrontier.

Keywords: Data envelopment analysis; Nonconvex metatechnology; Metafrontier; Returns to scale (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:ejores:v:268:y:2018:i:1:p:268-280