Decision making and performance evaluation using data envelopment analysis

Abstract

This book offers new transparent views and step-by-step methods for performance evaluation of a set of units using Data Envelopment Analysis (DEA). The book has twelve practical chapters. Elementary concepts and definitions are gradually built in Chapters 1-6 based upon four examples of one input and one output factors, two input factors, two output factors, and four input and three output factors. Simultaneously, the mathematical foundations using linear programming are also introduced without any prerequisites. A reader with basic knowledge of mathematics and computers is able to understand the contents of the book. In addition, to prevent pre-judgment about the available concepts and definitions in the DEA literature, some new phrases are introduced and, after elucidating each phrase in detail in Chapters 1-6, they are reintroduced for industry-wide accuracy in Chapter 7. After that, some of the more advanced DEA topics are illustrated in Chapters 8-12, such as: production-planning problems, output-input ratio analysis, efficiency over different time periods, Malmquist efficiency indexes, and a delta neighborhood model. A clear overview of many of the elementary and advanced concepts of DEA is provided, including Technical Efficiency, Relative Efficiency, Cost/Revenue/Profit Efficiency, Price/Overall Efficiency, the DEA axioms, the mathematical background to measure technical efficiency and overall efficiency, the multiplier/envelopment form of basic DEA models in input/output-orientation, the multiplier/envelopment of Additive DEA model, the multiplier/envelopment of slacks-based models, and others. The book also covers a variety of DEA techniques, input-output ratio analysis, the natural relationships between DEA frontier and the ratio of output to input factors, production-planning problems, planning ideas with a centralized decision-making unit, context-dependent DEA, Malmquist efficiency index, efficiency over different time periods, and others. End-of-chapter exercises are provided for each chapter.