DEA Cross-Efficiency Aggregation with Deviation Degree Based on Standardized Euclidean Distance

Abstract

Data envelopment analysis (DEA) has been extended to cross-efficiency to provide better discrimination and ranking of decision-making units (DMUs). Current researches about cross-efficiency mainly focus on the non-uniqueness of optimal solution of linear programming and information aggregation. As a common distance metric, standardized Euclidean distance is introduced to define the discrimination power between two vectors and the deviation degree for measuring the difference between the individual preference and group ideal preference. Based on above definitions, an alternative method is presented to compare multiple optimal solutions, and further, a universal weighted cross-efficiency model considering both dynamic adjustment of weights and preference formulation is constructed for evaluation and ranking. Two numerical examples are given to illustrate the effectiveness of the comparison method for multiple optimal solutions and weights determination method of DMUs, respectively. At last, a practical application aimed at evaluating environmental treatment efficiency in western area of China is given. Comparative analysis shows that our model could be more moderate, flexible, and general than some available models and methods, which can extend the theoretical research of cross-efficiency evaluation.