Gradual technical and scale efficiency improvement in DEA

Sebastián Lozano () and Gabriel Villa

Annals of Operations Research, 2010, vol. 173, issue 1, 123-136

Abstract: In data envelopment analysis (DEA) an inefficient unit can be projected onto an efficient target that is far away, i.e. reaching the target may demand large reductions in inputs and increases in outputs. When the inputs and outputs modifications planned are large, it may be troublesome to carry them out all at once. In order to help an inefficient unit reach a distant target, a strategy of gradual improvements with successive, intermediate targets has been proposed. This paper extends such approach to the variable returns to scale (VRS) case. In the VRS scenario we distinguish between units that are technical efficient and those that are not. On the one hand, for those units that are not technical efficient the proposed approach determines successive intermediate targets leading to the technical efficiency frontier, i.e. the priority for those units is to attain technical efficiency. On the other hand, for those units that are technical efficient but not scale efficient the proposed approach computes a sequence of targets ending in the global efficiency frontier, i.e. when technical efficiency is guaranteed the goal is then to attain global efficiency. In both cases, the successive targets are obtained by iteratively solving specific DEA models that take into account given bounds on the rates of change in inputs and outputs that the unit can implement in each step. Copyright Springer Science+Business Media, LLC 2010

Keywords: Data envelopment analysis; Efficiency targets; Variable returns to scale; Efficiency improvement program (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (17)

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DOI: 10.1007/s10479-009-0583-7

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