Data Envelopment Analysis with Partially Perfect Objects

Authors: Alexander Y. Vaninsky

Abstract:

This paper presents a simplified version of Data Envelopment Analysis (DEA) - a conventional approach to evaluating the performance and ranking of competitive objects characterized by two groups of factors acting in opposite directions: inputs and outputs. DEA with a Perfect Object (DEA PO) augments the group of actual objects with a virtual Perfect Object - the one having greatest outputs and smallest inputs. It allows for obtaining an explicit analytical solution and making a step to an absolute efficiency. This paper develops this approach further and introduces a DEA model with Partially Perfect Objects. DEA PPO consecutively eliminates the smallest relative inputs or greatest relative outputs, and applies DEA PO to the reduced collections of indicators. The partial efficiency scores are combined to get the weighted efficiency score. The computational scheme remains simple, like that of DEA PO, but the advantage of the DEA PPO is taking into account all of the inputs and outputs for each actual object. Firm evaluation is considered as an example.

Keywords: Data Envelopment Analysis, Perfect object, Partially perfect object, Partial efficiency, Explicit solution, Simplified algorithm.

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1086663

References:

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