DEA target setting approach within the cross efficiency framework

Lei Chen and Ying-Ming Wang

Omega, 2020, vol. 96, issue C

Abstract: Target setting is an important reason that data envelopment analysis (DEA) is widely applied to analyze efficiency. However, the efficiency overestimation of traditional DEA may affect the rationality of target setting, and even may make this method invalid in target setting. This paper innovatively proposes the definition of cross efficient, and develops two new target setting approaches for individual decision-making unit (DMU) and global optimization to improve the cross efficiency of DMUs in different decision-making situations. Then the influence of decision maker's preference on the improvement direction is discussed, and then these approaches are further extended. This paper solves the limitations of traditional DEA in target setting, and provides different directions to improve cross efficiency for meeting decision makers’ needs. Finally, two examples are provided to illustrate the effectiveness of these approaches.

Keywords: Data envelopment analysis; Target setting; Cross efficient; Preference; Improvement direction (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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DOI: 10.1016/j.omega.2019.05.008

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