DEA-R: ratio-based comparative efficiency model, its mathematical relation to DEA and its use in applications.

Despić, Ozren; Despić, Mladen; Paradi, Joseph C.

We propose a new mathematical model for efficiency analysis, which combines DEA methodology with an old idea—Ratio Analysis. Our model, called DEA-R, treats all possible ratios “output/input” as outputs within the standard DEA model. Although DEA and DEA-R generate different summary measures for efficiency, the two measures are comparable. Our mathematical and empirical comparisons establish the validity of DEA-R model in its own right. The key advantage of DEA-R over DEA is that it allows effective integration of the model with experts’ opinions via flexible restrictive conditions on individual “output/input” pairs.

DATA envelopment analysis; LINEAR programming; MATHEMATICAL programming; MATHEMATICAL models; SIMULATION methods & models; RATIO analysis; INDUSTRIAL management; INDUSTRIAL efficiency; PRODUCTION (Economic theory)

Journal of Productivity Analysis, 2007, Vol 28, Issue 1/2, p33

0895-562X

Academic Journal

10.1007/s11123-007-0050-x