Gradual efficiency improvement through a sequence of targets

Akram Dehnokhalaji, Narges Soltani

Research output: Contribution to journalArticlepeer-review

Abstract

The goal in efficiency analysis is not only to evaluate a decision-making unit (DMU) performance, but also to find an efficient target which provides information on inputs reduction and outputs increment values that are necessary to remove inefficiencies for each inefficient DMU. In data envelopment analysis (DEA), the target unit is located on the efficient frontier and possibly far from the unit under assessment. Therefore, in practice performance improvement seems to be disappointing or even impossible to achieve in only one step for some inefficient DMUs. In this regard, finding intermediate targets is of great importance in benchmarking literature. In this article, we find a sequence of targets instead of a single target for each inefficient unit. In our method, the intermediate target at each step has three properties: (I) the intermediate targets and the unit under evaluation are all similar in size; (II) efficiency scores are ascending through the sequence of targets; (III) the target unit at each step is close to the special part of the efficient frontier as much as possible. These properties lead to finding a target that is more achievable in real applications.
Original languageEnglish
Pages (from-to)2143-2152
Number of pages10
JournalJournal of the Operational Research Society
Volume70
Issue number12
Early online date4 Mar 2019
DOIs
Publication statusPublished - 2 Dec 2019

Bibliographical note

This is an Accepted Manuscript of an article published by Taylor & Francis Group in Journal of the Operational Research Society on 4 Mar 2019, available online at: http://www.tandfonline.com/10.1080/01605682.2018.1529723

Keywords

  • Data envelopment analysis
  • gradual improvement
  • returns to scale
  • target setting

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