Weight-restricted DEA in action: from expert opinions to mathematical models

Abstract

A common problem in real-world DEA applications is that all inputs and outputs may not be equally relevant to the organizations analysed and their stakeholders. In many cases, one is also faced with a data set where the decision-making units do not clearly outnumber the quantity of inputs and outputs. This study reports an application where DEA embellished with weight restrictions is used to analyse the efficiency of public organizations to overcome the above-mentioned problems. Whereas there are numerous documented applications of weight-restricted DEA in the literature, the process of defining the actual weight restrictions is seldom described. However, that part — defining the actual weights restrictions based on price, preference or value information — is the most difficult step involved in using the weight-restricted DEA. Comparing various weight restriction schemes with real data suggests that the ability to consider and include preference information in DEA adds important insights into the analysis.

Keywords:

• assurance regions
• data envelopment analysis
• economic efficiency
• forestry
• public organizations
• weight restrictions

Acknowledgements

We thank Professor Pekka Korhonen and an anonymous reviewer for helpful comments and Mr Tapani Honkanen and Mr Hannu Niemelä from the National Forestry Service for their assistance in providing data.