A Cross-Efficiency Based Ranking Method for Finding the Most Efficient DMU

S Sadeghi Gavgani,M Zohrehbandian

doi:10.1155/2014/269768

S Sadeghi Gavgani, M Zohrehbandian

Open Access

https://doi.org/10.1155/2014/269768

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Abstract

In many applications of DEA, ranking of DMUs and finding the most efficient DMU are desirable, as reported by Toloo (2013). In this paper, after introducing an improvement to the measure of cross-efficiency by Jahanshahloo et al. (2011), we develop a new ranking method under the condition of variable returns to scale (VRS). Numerical example illustrates the effectiveness of the proposed cross-efficiency based ranking method and demonstrates the advantages of our proposal, against the other ranking approaches.

Highlights

Data envelopment analysis (DEA) provides a relative efficiency measure to evaluate decision making units (DMUs) with multiple inputs and multiple outputs. While it is an effective approach in identifying the best practice frontier, its flexibility in selecting the input/output weights and its nature of self-evaluation may result in a relatively high number of efficient DMUs
The lack of discrimination between efficient DMUs has been considered as an important problem in DEA models and subgroups of papers have been developed in this field in which many researchers have sought to improve the differential capabilities of DEA and to fully rank both efficient and inefficient DMUs
The basic idea of the crossefficiency evaluation is to evaluate the overall efficiencies of the DMUs through both self- and peer-evaluations and can usually provide a full ranking for the DMUs to be evaluated

Summary

Introduction

Data envelopment analysis (DEA) provides a relative efficiency measure to evaluate decision making units (DMUs) with multiple inputs and multiple outputs. The basic idea of the crossefficiency evaluation is to evaluate the overall efficiencies of the DMUs through both self- and peer-evaluations and can usually provide a full ranking for the DMUs to be evaluated It has found a significant number of applications in various fields; see Green et al [4], Sun and Lu [5], Bao et al [6], Wu et al [7, 8], and Yang et al [9].

DEA Background

BCC Cross-Efficiency Evaluation

Numerical Example

Conclusion