Abstract
Data Envelopment Analysis (DEA) is a non-parametric, optimisation-based benchmarking technique first introduced by Charnes et al. (European Journal of Operational Research, 2(6), pp. 429–444, 1978), later extended by Banker et al. (Management Science 30(9), pp. 1078–1092, 1984), with many variations of DEA models proposed since. DEA measures the production efficiency of a so-called Decision Making Unit (DMU) which consumes inputs to produce outputs. DEA is a particularly useful tool when there are multiple measures to be analysed in terms of DMU (or organisation) performance, allowing it to benchmark and identify comparable peers. DEA can incorporate different measures of multi-dimensional activities thus allowing for DMU complexity and is particularly useful for more ingrained analyses when investigating the effects of contextual or environmental factors on organisations’ performance. DEA has been applied in numerous areas including banking, education, health, transport, justice, retail stores, auditing, fighter jet design, research and development to name a few.
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