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Data Envelopment Analysis for Performance Evaluation: A Child’s Guide

In: Benchmarking for Performance Evaluation

Author

Listed:
  • Subhash C. Ray

    (University of Connecticut)

  • Lei Chen

    (Jianghan University)

Abstract

In this paper we offer a simple exposition of the neoclassical production theoretic foundations of Data Envelopment Analysis (DEA). The concepts of technical efficiency (both input and output oriented), scale efficiency, and cost efficiency are explained, and the corresponding DEA models are described in detail. We offer step-by-step instruction on how to write the codes for solving various DEA models using the Solver option in the widely accessible MS Excel software. An important feature of this paper is a detailed exposition of how to write various Visual Basic Macro programs for solving DEA problems. We also describe the non-convex free disposal hull (FDH) procedure and the second-stage regression analysis that seeks to account for variation in measured efficiency scores due to external factors.

Suggested Citation

  • Subhash C. Ray & Lei Chen, 2015. "Data Envelopment Analysis for Performance Evaluation: A Child’s Guide," Springer Books, in: Subhash C. Ray & Subal C. Kumbhakar & Pami Dua (ed.), Benchmarking for Performance Evaluation, edition 127, chapter 0, pages 75-116, Springer.
    • Handle: RePEc:spr:sprchp:978-81-322-2253-8_2
    DOI: 10.1007/978-81-322-2253-8_2
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    References listed on IDEAS

    as
    1. Ray,Subhash C., 2012. "Data Envelopment Analysis," Cambridge Books, Cambridge University Press, number 9781107405264.
    2. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    3. 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.
    4. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    5. William W. Cooper & Lawrence M. Seiford & Kaoru Tone, 2007. "Data Envelopment Analysis," Springer Books, Springer, edition 0, number 978-0-387-45283-8, December.
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    Cited by:

    1. Giuseppe Coco & Raffaele Lagravinese & Giuliano Resce, 2020. "Beyond the weights: a multicriteria approach to evaluate inequality in education," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(4), pages 469-489, December.
    2. Maha Kalai, 2019. "Nonparametric Measures of Capacity Utilization of the Tunisian Manufacturing Industry: Short- and Long-Run Dual Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(1), pages 318-334, March.

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    More about this item

    Keywords

    Efficiency; Linear programming; Benchmarking; Excel solver; D2;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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