A Universal Solution For Units - Invariance In Data Envelopment Analysis
AbstractThe directional distance function model is a generalization of the radial model in data envelopment analysis (DEA). The directional distance function model is appropriate for dealing with cases where undesirable outputs exist. However, it is not a units-invariant measure of efficiency, which limits its accuracy. In this paper, we develop a data normalization method for DEA, which is a universal solution for the problem of units-invariance in DEA. The efficiency scores remain unchanged when the original data are replaced with the normalized data in the existing units-invariant DEA models, including the radial and slack-based measure models, i.e., the data normalization method is compatible with the radial and slack-based measure models. Based on normalized data, a units-invariant efficiency measure for the directional distance function model is defined.
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Bibliographic InfoArticle provided by ASERS Publishing in its journal Theoretical and Practical Research in Economic Fields.
Volume (Year): III (2012)
Issue (Month): 2 (January)
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Data envelopment analysis; data normalization; units-invariance; directional distance function.;
Other versions of this item:
- Xu, Jin & Zervopoulos, Panagiotis & Qian, Zhenhua & Cheng, Gang, 2012. "A universal solution for units-invariance in data envelopment analysis," MPRA Paper 41633, University Library of Munich, Germany.
- C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
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