Integrating DEA-oriented performance assessment and target setting using interactive MOLP methods

Abstract

Data envelopment analysis (DEA) and multiple objective linear programming (MOLP) are tools that can be used in management control and planning. Whilst these two types of model are similar in structure, DEA is directed to assessing past performances as part of management control function and MOLP to planning future performance targets. This paper is devoted to investigating equivalence models and interactive tradeoff analysis procedures in MOLP, such that DEA-oriented performance assessment and target setting can be integrated in a way that the decision makers' preferences can be taken into account in an interactive fashion. Three equivalence models are investigated between the output-oriented dual DEA model and the minimax reference point formulations, namely the super-ideal point model, the ideal point model and the shortest distance model. These models can be used to support efficiency analysis in the same way as the conventional DEA model does and also support tradeoff analysis for setting target values by individuals or groups. A case study is conducted to illustrate how DEA-oriented efficiency analysis can be conducted using the MOLP methods and how such performance assessment can be integrated into an interactive procedure for setting realistic target values.