Determining a sequence of targets in DEA

Abstract

Data Envelopment Analysis (DEA) can be used for assessing the relative efficiency of a number of operating units, finding, for each inefficient unit, a target operating point lying on the efficient frontier. Most DEA models project an inefficient unit onto a most distant target, which makes its attainment more difficult. In this paper, we advocate determining a sequence of targets, each one within an appropriate, short distance of the preceding. The proposed Constant Returns to Scale approach has two interesting features: (a) the sequence of targets ends in the efficient frontier and (b) the final, efficient target is generally closer to the original unit than the one-step projection is.

Keywords:

• Data Envelopment Analysis
• efficient targets
• Constant Returns to Scale
• gradual efficiency improvement

Acknowledgements

We are thankful to an anonymous referee for his/her constructive comments, which have helped to improve the paper.