Directional distance functions data envelopment analysis method with endogenous direction for target setting

Lei Chen and Suhui Wang

Journal of the Operational Research Society, 2024, vol. 75, issue 9, 1699-1710

Abstract: The determination of reasonable improvement direction is the key difficulty of directional distance functions in data envelopment analysis target setting method, but there is no consensus direction determination method at present. This paper introduces the concept of minimizing the distance between decision-making units (DMUs) and production frontier for constructing a new endogenous mechanism of improvement direction, and the corresponding target setting method is constructed to setting target for DMUs, which is used to minimize the total projection distance between DMUs and their targets. In addition, the free direction and unit invariant of improvement direction are discussed for meeting the diverse needs of decision makers.

Date: 2024
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DOI: 10.1080/01605682.2023.2272855

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