Super-efficiency based on a modified directional distance function

Abstract

The problem of infeasibility arises in conventional radial super-efficiency data envelopment analysis (DEA) models under variable returns to scale (VRS). To tackle this issue, a Nerlove–Luenberger (N–L) measure of super-efficiency is developed based on a directional distance function. Although this N–L super-efficiency model does not suffer infeasibility problem as in the conventional radial super-efficiency DEA models, it can produce an infeasible solution in two special situations. The current paper proposes to modify the directional distance function by selecting proper feasible reference bundles so that the resulting N–L measure of super-efficiency is always feasible. As a result, our modified VRS super-efficiency model successfully addresses the infeasibility issues occurring either in conventional VRS models or the N–L super-efficiency model. Numerical examples are used to demonstrate our approach and compare results obtained from various super-efficiency measures.