Overall performance evaluation: new bounded DEA models against unreachability of efficiency

Jin-Xiao Chen
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Jin-Xiao Chen: Tsinghua University, Beijing, China

Journal of the Operational Research Society, 2014, vol. 65, issue 7, 1120-1132

Abstract: Data envelopment analysis (DEA) performance evaluation can be implemented from either optimistic or pessimistic perspectives. For an overall performance evaluation from both perspectives, bounded DEA models are introduced to evaluate decision making units (DMUs) in terms of interval efficiencies. This paper reveals unreachability of efficiency and distortion of frontiers associated with the existing bounded DEA models. New bounded DEA models against these problems are proposed by integrating the archetypal optimistic and pessimistic DEA models into a model with bounded efficiency. It provides a new way of deriving empirical estimates of efficiency frontiers in tune with that identified by the archetypal models. Without distortion of frontiers, all DMUs reach interval efficiencies in accordance with that determined by the archetypal models. A unified evaluation and classification result is derived and the efficiency relationships between DMUs are preserved. It is shown that the newly proposed models are more reliable for overall performance evaluation in practice, as illustrated empirically by two examples.

Date: 2014
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