Abstract
In 1978 Charnes, Cooper, and Rhodes introduced Data Envelopment Analysis (DEA) as a method to rate the efficiencies of decision making units by imputing weights to observed inputs and outputs in order to form an efficiency ratio. Based on this work, a three step procedure is presented which may be used to estimate the values of parameters such as unknown costs. In the presentation a method called the Principle of Maximum Efficiency Estimation (MEE) is introduced. An application to the estimation of inventory cost parameters is given.
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