Efficiency intervals, rank intervals and dominance relations of decision-making units with fixed-sum outputs

Lifan Chen, Mengyu Guo*, Yongjun Li, Liang Liang, Ahti Salo

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

5 Citations (Scopus)

Abstract

How to evaluate the performance of decision-making units (DMUs) with fixed-sum outputs is a timely and challenging question in data envelopment analysis (DEA). Two major challenges are (1) how to determine a common equilibrium efficient frontier and (2) how to deal with multiple feasible equilibrium efficient frontiers. This paper first uses a simple dataset to illustrate the possibility of multiple equilibrium efficient frontiers and the corresponding major differences in the DMUs’ efficiencies and rankings resulting from these frontiers. We address these challenges by considering all feasible equilibrium efficient frontiers and develop several models to obtain the corresponding efficiency intervals, ranking intervals and dominance relations for the DMUs with fixed-sum outputs. We illustrate the proposed approach with two numerical examples and show that it gives more informative results than previous DEA approaches. For example, there are interesting dominance relations between DMUs under the fixed-sum outputs; yet these relations do not exist when there are no fixed-sum outputs. In addition, the efficiency ranges and ranking intervals can be narrowed by accounting for policy suggestions such as adjustment constraints of fixed-sum outputs for DMUs.

Original languageEnglish
Pages (from-to)238-249
Number of pages12
JournalEuropean Journal of Operational Research
Volume292
Issue number1
Early online date2020
DOIs
Publication statusPublished - 1 Jul 2021
MoE publication typeA1 Journal article-refereed

Keywords

  • Data envelopment analysis (DEA)
  • Dominance relations
  • Efficiency interval
  • Fixed-sum outputs
  • Rank interval

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