The Efficiency Improvement of Decision Making Units Using the Intersection of Supporting Hyperplanes of the Production Possibility Set in Data Envelopment Analysis

Abstract

Data Envelopment Analysis (DEA) is an estimator. This estimator tries to assess a relationship between multiple inputs and multiple outputs, and an identified technology. In traditional DEA models, firms are classified into two divisions, efficient and inefficient. Efficient firms are considered as a reference for inefficient firms. In traditional DEA models, the efficiency improvement has been inspected for inefficient firms and efficient firms are assumed to be unchanged. Since the estimated technology is rationally smaller than the real technology or in other words, the estimated technology is always the subset of the true technology, we can expand it a little. Thus, we can improve efficient firms. This is done by creating some virtual DMUs. In this paper, an algorithm is proposed to expand the Production Possibility Set (PPS) and to improve efficient firms. To illustrate the proposed approach, numerical and applied examples are provided. The results are explained and discussed.

Keywords

• data envelopment analysis (dea)
• improvement
• supporting hyperplane
• production possibility set (pps)
• real technology