Introduction to Data Envelopment Analysis and Its Uses With DEA-Solv

Recent years have seen a great variety of applications of DEA (Data Envelopment Analysis) for use in evaluating the performances of many different kinds of entities engaged in many different activities in many different contexts in many different countrie

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INTRODUCTION TO DATA ENVELOPMENT ANALYSIS AND ITS USES With DEA-Solver Software and References

WILLIAM W. COOPER University of Texas at Austin, U.S.A.

LAWRENCE M. SEIFORD University of Michigan, U.S.A.

KAORU TONE National Graduate Institute for Policy Studies, Japan

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Spriinger

William W. Cooper University of Texas, USA

Lawrence M. Seiford University of Michigan, USA

Kaoru Tone National Graduate Institute for Policy Studies, Japan Library of Congress Cataloging-in-Publication Data ISBN-10: 0-387-28580-6 (SC) ISBN-10: 0-387-29122-9 (e-book)

ISBN-13: 978-0387-28580-1 (SQ ISBN-13: 978-0387-29122-2 (e-book)

© 2006 by Springer Science+Business Media, Inc. All rights reserved. This work may not be translated or copied in whole or in part without the written permission of the publisher (Springer Science + Business Media, Inc., 233 Spring Street, New York, NY 10013, USA), except for brief excerpts in cormection with reviews or scholarly analysis. Use in connection with any form of information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now know or hereafter developed is forbidden. The use in this publication of trade names, trademarks, service marks and similar terms, even if the are not identified as such, is not to be taken as an expression of opinion as to whether or not they are subject to proprietary rights. Printed in the United States of America.

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Printed on acid-free paper.

SPIN 11542650

To R u t h , Bev and Michiko

Contents

List of Tables

xlii

List of Figures

xvii

Preface

xix

1. GENERAL DISCUSSION

2.

1

1.1

Introduction

1

1.2

Single Input and Single Output

2

1.3

Two Inputs and One Output Case

6

1.4

One Input and Two Outputs Case

8

1.5

Fixed and Variable Weights

1.6

Summary and Conclusion

13

1.7

Problem Supplement for Chapter 1

15

BASIC CCR MODEL

12

21

2.1

Introduction

21

2.2

Data

22

2.3

The CCR Model

23

2.4

From a Fractional to a Linear Program

23

2.5

Meaning of Optimal Weights

25

2.6

Explanatory Examples 2.6.1 Example 2.1 (1 Input and 1 Output Case)

25 26

2.6.2

27

Example 2.2 (2 Inputs and 1 Output Case)

2.7

Illustration of Example 2.2

30

2.8

Summary of Chapter 2

32

2.9

Selected Bibliography

33

2.10 Problem Supplement for Chapter 2 3. CCR MODEL AND PRODUCTION CORRESPONDENCE

34 41

3.1

Introduction

41

3.2

Production Possibility Set

42

3.3

The CCR Model and Dual Problem

43

3.4

The Reference Set and Improvement in Efficiency

47

vii

i

INTRODUCTION TO DATA ENVELOPMENT ANALYSIS AND ITS USES 3.5

Theorems on CCR-Efficiency

48

3.6

Computational Aspects of the CCR Model 3.6.1 Computational Procedure for the CCR Model 3.6.2 Data Envelopment Analysis and the Data 3.6.3 Determination of Weights (=Multipliers) 3.6.4 Reasons for Solving the CCR Model Using the Envelopment Form

50 50 52 52 52

3.7

Example

53

3.8

The Output-Oriented Model

58

3.9

Discretionary and Non-Discretionary Inputs

60

3.10 Summary of Chapter 3

64

3.11