Cost efficiency analysis with ordinal data: a theoretical and computational view

Abstract

Standard Data Envelopment Analysis models obtain the cost efficiency of units when the data are known exactly, but these models fail to evaluate the units in the presence of ordinal data. Therefore, this paper provides models for the treatment of ordinal data in cost efficiency analysis. The models have multiplier forms with additional weight restrictions. The main idea in constructing these models is based on the weighted enumeration of the number of inputs/outputs of each unit which are categorized on the same scale rate. Some techniques to reduce the complexity of the models are introduced.

Keywords:

• Cost efficiency
• DEA
• Weight restrictions
• Ordinal data
• Computational complexity

Acknowledgements

The authors wish to thank two anonymous referees for their constructive comments which contributed to the improvement of this paper. They are also thankful to K. Rezaei for editing the draft of the paper.