IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v210y2011i2p310-317.html
   My bibliography  Save this article

Efficiency measurement using independent component analysis and data envelopment analysis

Author

Listed:
  • Kao, Ling-Jing
  • Lu, Chi-Jie
  • Chiu, Chih-Chou

Abstract

Efficiency measurement is an important issue for any firm or organization. Efficiency measurement allows organizations to compare their performance with their competitors' and then develop corresponding plans to improve performance. Various efficiency measurement tools, such as conventional statistical methods and non-parametric methods, have been successfully developed in the literature. Among these tools, the data envelopment analysis (DEA) approach is one of the most widely discussed. However, problems of discrimination between efficient and inefficient decision-making units also exist in the DEA context (Adler and Yazhemsky, 2010). In this paper, a two-stage approach of integrating independent component analysis (ICA) and data envelopment analysis (DEA) is proposed to overcome this issue. We suggest using ICA first to extract the input variables for generating independent components, then selecting the ICs representing the independent sources of input variables, and finally, inputting the selected ICs as new variables in the DEA model. A simulated dataset and a hospital dataset provided by the Office of Statistics in Taiwan's Department of Health are used to demonstrate the validity of the proposed two-stage approach. The results show that the proposed method can not only separate performance differences between the DMUs but also improve the discriminatory capability of the DEA's efficiency measurement.

Suggested Citation

  • Kao, Ling-Jing & Lu, Chi-Jie & Chiu, Chih-Chou, 2011. "Efficiency measurement using independent component analysis and data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 210(2), pages 310-317, April.
  • Handle: RePEc:eee:ejores:v:210:y:2011:i:2:p:310-317
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377-2217(10)00614-4
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. David Parkin & Bruce Hollingsworth, 1997. "Measuring production efficiency of acute hospitals in Scotland, 1991-94: validity issues in data envelopment analysis," Applied Economics, Taylor & Francis Journals, vol. 29(11), pages 1425-1433.
    2. Sahoo, Biresh K. & Tone, Kaoru, 2009. "Decomposing capacity utilization in data envelopment analysis: An application to banks in India," European Journal of Operational Research, Elsevier, vol. 195(2), pages 575-594, June.
    3. Adler, Nicole & Golany, Boaz, 2001. "Evaluation of deregulated airline networks using data envelopment analysis combined with principal component analysis with an application to Western Europe," European Journal of Operational Research, Elsevier, vol. 132(2), pages 260-273, July.
    4. Puig-Junoy, Jaume, 2000. "Partitioning input cost efficiency into its allocative and technical components: an empirical DEA application to hospitals," Socio-Economic Planning Sciences, Elsevier, vol. 34(3), pages 199-218, September.
    5. Kao, Chiang & Liu, Shiang-Tai, 2009. "Stochastic data envelopment analysis in measuring the efficiency of Taiwan commercial banks," European Journal of Operational Research, Elsevier, vol. 196(1), pages 312-322, July.
    6. Adler, Nicole & Yazhemsky, Ekaterina, 2010. "Improving discrimination in data envelopment analysis: PCA-DEA or variable reduction," European Journal of Operational Research, Elsevier, vol. 202(1), pages 273-284, April.
    7. Ray, Subhash C. & Jeon, Yongil, 2008. "Reputation and efficiency: A non-parametric assessment of America's top-rated MBA programs," European Journal of Operational Research, Elsevier, vol. 189(1), pages 245-268, August.
    8. Dyson, R. G. & Allen, R. & Camanho, A. S. & Podinovski, V. V. & Sarrico, C. S. & Shale, E. A., 2001. "Pitfalls and protocols in DEA," European Journal of Operational Research, Elsevier, vol. 132(2), pages 245-259, July.
    9. 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.
    10. Ancarani, A. & Di Mauro, C. & Giammanco, M.D., 2009. "The impact of managerial and organizational aspects on hospital wards' efficiency: Evidence from a case study," European Journal of Operational Research, Elsevier, vol. 194(1), pages 280-293, April.
    11. W.W. Cooper & Timothy W. Ruefli & Honghui Deng & Jun Wu & Zhongyi Zhang, 2008. "Are state-owned banks less efficient? A long- vs. short-run Data Envelopment Analysis of Chinese banks," International Journal of Operational Research, Inderscience Enterprises Ltd, vol. 3(5), pages 533-556.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:eee:ecofin:v:43:y:2018:i:c:p:71-86 is not listed on IDEAS
    2. Tuncay Ozcan & Fatih Tuysuz, 2016. "Modified Grey Relational Analysis Integrated with Grey Dematel Approach for the Performance Evaluation of Retail Stores," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 15(02), pages 353-386, March.
    3. Lin, Tzu-Yu & Chiu, Sheng-Hsiung, 2013. "Using independent component analysis and network DEA to improve bank performance evaluation," Economic Modelling, Elsevier, vol. 32(C), pages 608-616.
    4. Andrejić, Milan & Bojović, Nebojša & Kilibarda, Milorad, 2016. "A framework for measuring transport efficiency in distribution centers," Transport Policy, Elsevier, vol. 45(C), pages 99-106.
    5. R. K. Jha & B. S. Sahay & P. Charan, 2016. "Healthcare operations management: a structured literature review," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 43(3), pages 259-279, September.
    6. Aldanondo, Ana M. & Casasnovas, Valero L., 2016. "A note on the impact of multiple input aggregators in technical efficiency estimation," MPRA Paper 75290, University Library of Munich, Germany.
    7. Antônio Artur de Souza & Ewerton Alex Avelar & Alisson Maciel de Faria Marques & Douglas Rafael Moreira & Osmar Ferreira da Silva & Daniele Oliveira Xavier, 2014. "Performance Analysis Of Brazilian Public And Philanthropic Hospitals (Análise Do Desempenho De Hospitais Públicos E Filantrópicos Brasileiros)," Portuguese Journal of Management Studies, ISEG, Universidade de Lisboa, vol. 0(2), pages 75-94.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:210:y:2011:i:2:p:310-317. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/eor .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.