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Multi-Attribute Decision Making Based on Stochastic DEA Cross-Efficiency with Ordinal Variable and Its Application to Evaluation of Banks’ Sustainable Development

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  • Jinpei Liu

    (School of Business, Anhui University, Hefei 230601, China
    Department of Industrial and Systems Engineering, North Carolina State University, Raleigh, NC 27695, USA)

  • Mengdi Fang

    (School of Business, Anhui University, Hefei 230601, China)

  • Feifei Jin

    (School of Business, Anhui University, Hefei 230601, China)

  • Chengsong Wu

    (School of Business, Anhui University, Hefei 230601, China)

  • Huayou Chen

    (School of Mathematical Sciences, Anhui University, Hefei 230601, China)

Abstract

Multi-attribute decision making (MADM) is a cognitive process for evaluating data with different attributes in order to select the optimal alternative from a finite number of alternatives. In the real world, a lot of MADM problems involve some random and ordinal variables. Therefore, in this paper, a MADM method based on stochastic data envelopment analysis (DEA) cross-efficiency with ordinal variable is proposed. First, we develop a stochastic DEA model with ordinal variable, which can derive self-efficiency and the optimal weight of each attribute for all decision making units (DMUs). To further improve its discrimination power, cross-efficiency as a significant extension is proposed, which utilizes peer DMUs’ optimal weight to evaluate the relative efficiency of each alternative. Then, based on self-efficiency and cross-efficiency of all DMUs, we construct corresponding fuzzy preference relations (FPRs) and consistent fuzzy preference relations (FPRs). In addition, we obtain the priority weight vector of all DMUs by utilizing the row wise summation technique according to the consistent FPRs. Finally, we provide a numerical example for evaluating operation performance of sustainable development of 15 listed banks in China, which illustrates the feasibility and applicability of the proposed MADM method based on stochastic DEA cross-efficiency with ordinal variable.

Suggested Citation

  • Jinpei Liu & Mengdi Fang & Feifei Jin & Chengsong Wu & Huayou Chen, 2020. "Multi-Attribute Decision Making Based on Stochastic DEA Cross-Efficiency with Ordinal Variable and Its Application to Evaluation of Banks’ Sustainable Development," Sustainability, MDPI, vol. 12(6), pages 1-15, March.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:6:p:2375-:d:333963
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