Target setting in data envelopment analysis: efficiency improvement models with predefined inputs/outputs

Abstract

In managerial decisions, situations frequently arise when decision makers need to define their capabilities, desires, and limitations when trying to improve efficiency. In this paper, target setting models that accommodate predefined desired output targets or predefined available inputs during efficiency improvement in data envelopment analysis are proposed. The proposed approach guarantees efficient targets when inefficient or weak efficient units’ desire expansion or reduction in outputs/inputs, and cases of input/output redistribution, or nondiscretionary variables in a production system. The approach is applied to two empirical studies, first, on a poultry chain trying to improve efficiency of some branches, and second on water, energy, land and food nexus trying to attain future sustainability based on preexisting inputs. Results of the empirical studies supports the proposed models.