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Integrating fuzzy goal programming and data envelopment analysis to incorporate preferred decision-maker targets in efficiency measurement

Author

Listed:
  • Debora Di Caprio

    (University of Trento
    York University)

  • Ali Ebrahimnejad

    (Islamic Azad University)

  • Mojtaba Ghiyasi

    (Shahrood University of Technology)

  • Francisco J. Santos-Arteaga

    (Free University of Bolzano)

Abstract

Data envelopment analysis (DEA) is a nonparametric frontier assessment method used to evaluate the relative efficiency of similar decision-making units (DMUs). This method provides benchmarking information regarding the removal of inefficiency. In conventional DEA models, the view of the decision maker (DM) is ignored and the performance of each DMU is solely determined by the observations retrieved. The current paper exploits the structural similarity existing between DEA and multiple objective programming to define a model that incorporates the preferences of DMs in the evaluation process of DMUs. Given the potential unfeasibility of the input and output targets selected by the DM, the model defines an interactive procedure that considers minimum and maximum acceptable objective levels. Given the feasible levels located closer to the targets selected by the DM, a program improving upon the feasible allocations is designed so that the suggested benchmark approximates the requirements fixed by the DM as much as possible. A real-life case study is included to illustrate the efficacy and applicability of the proposed hybrid procedure.

Suggested Citation

  • Debora Di Caprio & Ali Ebrahimnejad & Mojtaba Ghiyasi & Francisco J. Santos-Arteaga, 2020. "Integrating fuzzy goal programming and data envelopment analysis to incorporate preferred decision-maker targets in efficiency measurement," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 43(2), pages 673-690, December.
    • Handle: RePEc:spr:decfin:v:43:y:2020:i:2:d:10.1007_s10203-020-00297-5
    DOI: 10.1007/s10203-020-00297-5
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    References listed on IDEAS

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    1. Charnes, A. & Cooper, W. W. & Huang, Z. M. & Sun, D. B., 1990. "Polyhedral Cone-Ratio DEA Models with an illustrative application to large commercial banks," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 73-91.
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    6. Taylor, William M. & Thompson, Russell G. & Thrall, Robert M. & Dharmapala, P. S., 1997. "DEA/AR efficiency and profitability of Mexican banks a total income model," European Journal of Operational Research, Elsevier, vol. 98(2), pages 346-363, April.
    7. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
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    Cited by:

    1. Matteo Brunelli & Michele Fedrizzi & Salvatore Greco & José Rui Figueira & Roman Słowiński, 2020. "A special issue on multi-criteria decision aiding," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 43(2), pages 557-558, December.

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    More about this item

    Keywords

    Data envelopment analysis; Fuzzy goal programming; Multiple objective linear programming; Subjective preferences; Target setting; Efficiency;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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