In search for the most preferred solution in value efficiency analysis
Panagiotis Ravanos () and
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Panagiotis Ravanos: University of Macedonia
Giannis Karagiannis: University of Macedonia
Journal of Productivity Analysis, 2022, vol. 58, issue 2, No 6, 203-220
Abstract Choosing the Most Preferred Solution (MPS), namely a real or artificial Decision Making Unit (DMU) reflecting the decision maker’s preferences over the desirable structure of inputs and outputs, is of particular importance in Value Efficiency Analysis (VEA). In this paper, we review various MPS choices used in the VEA literature and propose some new, which rely respectively on the relative position of frontier DMUs, the Most Productive Scale Size (MPSS), the Average Production Unit (APU), and common vectors of weights. The suggested MPS choices reflect overall organizational goals such as the pursuit of scale economies and the maximization of structural efficiency, or the need to assess DMUs against common standards because of limited control over the resources allocated to them or autonomy in setting their own priorities. The potential implications of using different MPSs in VEA are illustrated by providing comparative empirical results using a dataset of 526 Greek cotton farms.
Keywords: Value efficiency analysis; Most preferred solution; DMU frontier position; Most productive scale size; Average production unit; Common weights (search for similar items in EconPapers)
JEL-codes: C14 C44 C61 D24 (search for similar items in EconPapers)
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