Lecture4_DEApart2.pdf - Data Enveloplement analysis(DEA(part 2 References \u2022 Data Envelopment Analysis A Comprehensive Text with Models Applications

Lecture4_DEApart2.pdf - Data Enveloplement...

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Data Enveloplement analysis (DEA)(part 2)References:Data Envelopment Analysis, A Comprehensive Text with Models, Applications,ReferencesandDEA-SolverSoftware,Authors:Cooper,WilliamW.,Seiford,Lawrence M.,Tone, Kaoru
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One input and two outputs example7 branch officesOutputs:The number of customers (unit = 10)The sales (unit = 1,000,000 $) per salesmanInput:The number of employees (salesmen)
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One input and two outputs exampleThe efficient frontier
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One input and two outputs exampleThe efficiency of D:
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One input and two outputs exampleThe efficiency of D:Its reciprocal:To be efficient, D, would have to increase both of its outputs by 4/3.
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Efficiency The inefficiency which can be eliminated by decreasinginputs by the same proportion (or increasing outputs by thesame proportion) is calledpurely technical inefficiencyorratio inefficiency. When only some (but not all) outputs (or inputs) are identified as exhibiting inefficient behavior, the elimination of this inefficiency will alter the proportions in which outputs are produced (or inputs are utilized). This is calledmix inefficiency.If the unit has no purely technical inefficiency and mix inefficiency, then it has technical efficiency(also namedCCR efficiency).
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Purely Technical and Mix EfficiencyUnits B, E, F and G form theefficiency frontier.Units A, C, D: inefficient. Unit A has purely technical inefficiency. this inefficiency can be eliminated. Hypothetical unit Q (with proportionally increased outputs): improved versionof unit A.Unit Q is on the efficiency frontier but not on the efficient part of the frontier! It is mixed inefficient(unit B has a better‘Ouput1/Input ratiothan unit Q) But it is alsopurely technical efficientorratio efficient(efficiency of Q = 1).
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Basic CCR ModelCCR- Charnes, Cooper and Rhodes - 1978Suppose that? = 1. . ? ∶service units, ? = 1. . ?: types of inputs,? = 1. . ?: types of outputsInput data matrix:Output data matrix:The Fractional Model:
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Basic CCR ModelFractional Model (FP):Find?and ?for unitOsuchthat objective function value𝜃is maximized.The optimal solution of LP is also optimal for FP with(? = ?, ? = ?)and sameobjective value𝜃.Model seeks to maximize the efficiency value to make every unit look as good as possible with efficiency rating as close to 100% as possible in comparison with the other service units being evaluated. (?, ?)are the set of most favorable weights for the unitO.LP Model :
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Basic CCREfficiency ExampleDefinition (CCR-Efficiency):The unit is CCR-efficient if𝜃=1, andthere exists at least one optimal (?, ?)with?> 0and?> 0.Otherwise, the unit is CCR-inefficient.For example: LP returns:
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Checking the results:Unit C: v1*= 0.0833, v2*=0.333, u*= 1, θ*=1. CCR-efficientby definition.Unit F: v1*=1, v2*=0, u*= 1, θ*=1.
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