engleski

Projections of Inefficient DMU to Efficient Frontier

Usually, when we apply DEA models, and the DMU under evaluation results as inefficient, we obtain a single efficient reference point which Pareto-dominates the DMU under evaluation. This point can also be interpreted as a target point on the frontier such that inefficient DMU should adopt its input/output mix to become efficient. In this work we are interested in the part of the efficient frontier of production possibility set that can be used as a set of referent points for inefficient DMU. These points are obtained from DMU under evaluation by applying changes, which form a polyhedral cone, to its inputs and outputs. We apply modified LP to obtain one projection point on the frontier of production possibility set along one of the edges of the cone of possible changes. Using the relationship between primal and dual program and applying parametric programming, where only RHS is changed, we obtain the desired subset of the efficient frontier.

Data envelopment analysis (DEA); efficiency; decision making unit (DMU); efficient frontier; projection

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