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An Improved Model For Assessing The Fdh-Cost Efficiency

Author

Listed:
  • KHALIL PARYAB

    (School of Mathematics, Iran University of Science and Technology, Tehran, Iran)

  • RASHED KHANJANI SHIRAZ

    (School of Mathematics, Iran University of Science and Technology, Tehran, Iran)

  • LEILA JALALZADEH

    (Tarbiyat Moalem Azarbayjan University, Tabriz, Iran)

Abstract

Recently Leleu [A linear programming framework for free disposal hull (FDH) technologies and cost functions: Primal and dual models] presented a linear model for assessing the FDH-cost function with various returns to scale assumptions. He stated that economic inefficiency can be computed as the ratio of the observed cost to the minimum cost and, as usual, the allocative inefficiency is computed as the ratio between the economic and the technical inefficiencies. In this paper, we propose a modified model with various returns to scale assumptions that has fewer constraints and variables than Leleu's model and obtains the FDH-cost efficiency directly. Reducing nm constraints and nm variables, where n is the number of DMUs and m is the number of inputs, leads to the computational advantage of our model over that of Leleu.

Suggested Citation

  • Khalil Paryab & Rashed Khanjani Shiraz & Leila Jalalzadeh, 2012. "An Improved Model For Assessing The Fdh-Cost Efficiency," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 29(04), pages 1-5.
    • Handle: RePEc:wsi:apjorx:v:29:y:2012:i:04:n:s0217595912500224
    DOI: 10.1142/S0217595912500224
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    Cited by:

    1. Walter Briec & Kristiaan Kerstens & Ignace Van de Woestyne, 2013. "Nonparametric cost and revenue functions under constant economies of scale: An enumeration approach for the single output or input case," Working Papers 2013-ECO-22, IESEG School of Management.

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