A Common Set of Weights for Ranking Decision-Making Units with Undesirable Outputs: A Double Frontiers Data Envelopment Analysis Approach

Lei Chen, Fei-Mei Wu (), Feng Feng (), Fujun Lai and Ying-Ming Wang
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Lei Chen: Decision Science Institute, School of Economics & Management, Fuzhou University, Fuzhou 350116, P. R. China2College of Business, University of Southern Mississippi, Hattiesburg, MS 39406, United States
Fei-Mei Wu: School of Economics and Management, Minjiang University, Fuzhou 350108, P. R. China
Feng Feng: Institute of Quantitative & Technical Economics, Chinese Academy of Social Sciences, Beijing 100732, P. R. China
Fujun Lai: College of Business, University of Southern Mississippi, Hattiesburg, MS 39406, United States5Research Center for Smarter Supply Chain, School of Business, Soochow University, Suzhou 215012, P. R. China
Ying-Ming Wang: Decision Science Institute, School of Economics & Management, Fuzhou University, Fuzhou 350116, P. R. China

Asia-Pacific Journal of Operational Research (APJOR), 2018, vol. 35, issue 06, 1-25

Abstract: Major drawbacks of the traditional data envelopment analysis (DEA) method include selecting optimal weights in a flexible manner, lacking adequate discrimination power for efficient decision-making units, and considering only desirable outputs. By introducing the concept of global efficiency optimization, this study proposed a double frontiers DEA approach with undesirable outputs to generate a common set of weights for evaluating all decision-making units from both the optimistic and pessimistic perspectives. For a unique optimal solution, compromise models for individual efficiency optimization were developed as a secondary goal. Finally, as an illustration, the models were applied to evaluate the energy efficiency of the Chinese regional economy. The results showed that the proposed approach could improve discrimination power and obtain a fair result in a case where both desirable and undesirable outputs exist.

Keywords: Data envelopment analysis; global efficiency; individual efficiency; compromise model; Chinese economy (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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DOI: 10.1142/S0217595918500392

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