Ali Emrouznejad's Data Envelopment Analysis

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There is an increasing concern with measuring and comparing the efficiency of organisational units such as
local authority departments, schools, hospitals, shops, bank branches and similar instances where there is a
relatively homogeneous set of units.
The usual measure of efficiency, i.e.:


is often inadequate due to the existence of multiple inputs and outputs related to different resources, activities
and environmental factors. This problem can be illustrated for depots of a large retailing organisation which
distributes goods to supermarkets. In this case the inputs for an efficiency measure are taken to be the value of
the stock and the recurrent costs mainly in the form of wages, as those are resources supporting the operation
of the depots. Stock is reasonably an input to an efficiency measure as an efficient depot will attempt to give a
good service at lower stock levels, saving on capital and space. The outputs correspond to activities of the
depots and are measured by the number of issues representing deliveries to supermarkets, the number of
receipts in bulk from suppliers, and the number of requisitions on suppliers where they are out of stock or
approaching stock out. (A further possible output would be a measure of the service level). The data on these
measures is shown in the following table.

STOCK(M) WAGES(100,000S) ISSUES(00S) RECEIPTS(000S) REQS(000S)
Depot 1 3 5 40 55 30
Depot 2 2.5 4.5 45 50 40
Depot 3 4 6 55 45 30
Depot 4 6 7 48 20 60
Depot S 2.3 3.5 28 50 25
Depot 6 4 6.5 48 20 65
Depot 7 7 10 80 65 57
Depot 8 4.4 6.4 25 48 30
Depot 9 3 5 45 64 42
Depot
10
5 7 70 65 48
Depot
11
5 7 45 65 40
Depot12 2 4 45 40 44
Depot13 5 7 65 25 35
Depot14 4 4 38 18 64
Depot15 2 3 20 50 15
Depot16 3 6 38 20 60
Depot17 7 11 68 64 54
Depot18 4 6 25 38 20
Depot19 3 4 45 67 32
Depot20 5 6 57 60 40

With two inputs and three outputs the difficulty of comparing the efficiency of depots becomes apparent. Some
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statements concerning the relative efficiency of depots can be made, for example comparing depots 10 and 11.
These both have the same stock levels and the same costs but depot 10 has activity levels which are all as great
or greater than those of depot 11. Clearly if these inputs and outputs are representative then depot 10 is more
efficient than depot 11. However the majority of comparisons are difficult to make. For example comparing
depots 14 and 15, depot 14 has higher inputs and has higher outputs on two measures but lower on one
measure. Here different patterns of activity levels are supported by different amounts of resources making
efficiency comparisons difficult and this is generally the case.
A formula for relative efficiency incorporating multiple inputs and outputs is introduced now, and the DEA
model which allows relative efficiency measures to be determined is developed. This is followed by a
discussion of the information made available by solving the model and some issues of practical concern in
applying the technique.
Call for papers
Managing Service Productivity : Call for book chapter proposals
(deadline January 31, 2012)
--------------------------------------------------------
Socio-Economic Planning Sciences: Special issue on DEA in the Public Sector
(deadline: January 15, 2013)
--------------------------------------------------------
DEA Journal Special issue for DEA2012
(deadline: January 15, 2013)
--------------------------------------------------------
William W Cooper (Tributes)
By Ali Emrouznejad and Rajiv Banker
History of DEA from its developer
William W Cooper

OR Society DEA Course One
day training
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11th International Conference on
Data Envelopment Analysis,
Turkey, June 27 to 30, 2012
see detials at: http://www.deazone.com/dea2013/
Managing Service Productivity: Call for book chapter proposals
(deadline 15 December 2012)
Title: Managing Service Productivity
Series: International Series in Operations Research & Management Science
Publisher: Springer
Editors:
Ali Emrouznejad, ,Aston Business School, Aston University, UK
Emilyn Cabanda, School of Business and Leadership Regent University, VA 23464, USA
http://deazone.com/en/service-productivity-book
PIM-DEA software
Performance Improvement
Management Software -
PIM-DEA software
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William W. Cooper
I am deeply saddened to report that Professor William W. Cooper passed away early in the morning on
Wednesday, June 20, 2012. Read
International Data Envelopment
Analysis Society
Applied Operational Research
with SAS, including free DEA
software
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The Data Envelopment Analysis
Journal , the official journal of
the International Data
Envelopment Analysis Society
FAQ
What is Data Envelopment Analysis?
BCC
Categorical variable
CCR (ratio) mode
Composite unit
Constant returns to scale
Convex cone - Conical hull
Convex hull
Convexity constraint
Cross efficiency matrix
DEA algorithm
DEA results are biased
Decreasing returns to scale
Discretionary factor
Discriminatory power
DMU (Decision making unit)
Dual Model
Dual weights - dual multipliers
Efficiency score
Efficiency/Productive efficiency
Envelopment form
Environmental factor
Epsilon
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Exogeneously fixed factor
Facet
Homogeneity
Increasing returns to scale
Input
Input-oriented
Input/output mix
Isotonicity
Most productive scale size (MPSS)
Multiplier form
Non-naturally enveloped unit
Nondiscretionary factor
Ordinal variable
Outlier
Output
Output-oriented
Overall efficiency
Pareto-efficiency/Pareto-Koopmans efficiency:
Peer group
Piecewise linearity
Primal (CCR) model
Production function
Productivity
Projected point
Radial measure
Ratio models
Reference set
Reference unit
Scale efficiency
Scale of operations
Slacks
Targets
Technical efficiency
Technology/Production technology
Unit
Unit isoquant/Isoquant
Units invariance
Variable
Variable returns to scale
Virtual input(output)
Virtual multipliers
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Visualisation
Weight Flexibility
Weights
Well-rounded performance
Window analysis
Featuring Top 69/69 of FAQ
Copyright
@1995-2012 [Ali Emrouznejad]
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