An Equitable Allocation of Fixed Costs and Resources: A Data Envelopment Analysis Approach

Purpose– The purpose of this paper is to measure the efficiencies of parallel subsystems with shared inputs/outputs. Each subsystem has not only a set of common inputs and outputs, but also some dedicated inputs and outputs as well as some shared inputs and outputs. A more general data envelopment analysis (DEA) approach is proposed to deal with this efficiency evaluation issue. Based on the proposed approach, mechanisms for shared inputs/outputs distribution and efficiency decomposition among sub-units are presented.Design/methodology/approach– To evaluate the efficiency of the parallel systems, this paper proposes a centralized DEA approach by assuming that the same input/output factor in a decision-making unit (DMU) has the same multiplier for all its sub-units. Furthermore, different proportions of shared inputs/outputs are imposed on sub-units within different DMUs in evaluating each DMU’s efficiency. The proposed approach is applied to evaluate the operational efficiencies of 18 railway firms in China.Findings– By using the proposed DEA approach, the efficiencies of the whole DMU and its sub-units can be measured at the same time, and the optimal allocation strategy of shared inputs/outputs can also be obtained. The proposed model is more reasonable and robust for measuring the operational performance of parallel systems with shared inputs and outputs. The efficiency of railway system in China is relatively low, and its inefficiency is largely caused by lower freight transportation performance. Great disparities among firms can be found in the passenger transportation efficiency and freight transportation efficiency.Research limitations/implications– This study develops the DEA model under the assumption of constant returns to scale, which can be directly extended to a situation with variable returns to scale.Practical implications– In this paper, the proposed approach is a more effective way to evaluate the efficiencies of parallel systems with shared inputs/outputs. With respect to the application, to improve the overall efficiency of China’s railway system, more efforts should be taken to improve its operational performance of freight transportation. Furthermore, firms’ disparities should also be considered when making these related policies.Originality/value– The proposed approach can evaluate the whole DMU and its sub-units at the same time. Considering simultaneously the common/dedicated/shared inputs/outputs, the proposed approach is more general than the existing approaches in the literature. In the described approach, the same type of input or output is assumed to have the same weight for all sub-units within one DMU. More importantly, the proposed model imposes different proportions of shared inputs/outputs on different DMUs’ sub-units when measuring the efficiency for each DMU.

Data envelopment analysis (DEA) is a tool for measuring the relative efficiency of decision-making units (DMUs) that perform similar tasks. One of the uses of the DEA is the establishment of benchmarks for inefficient DMUs. These benchmarks play the role of target for inefficient DMUs. However, traditional DEA (TDEA) models fail to rank the efficient DMUs, and as a result, they cannot determine a benchmark for the inefficient DMUs. To overcome this shortcoming, this paper proposes virtual network DEA (NDEA) approach. The proposed method not only ranks the whole inefficient and efficient DMUs but also establishes a virtual benchmark called ideal DMU. The case study demonstrates the applicability of the proposed model.

Data envelopment analysis (DEA) is a method for measuring efficiency of peer decision-making units (DMUs). Conventional DEA evaluates the performance of each DMU using a set of most favourable weights. As a result, traditional DEA models can be considered methods for the analysis of the best relative efficiency or analysis of the optimistic efficiency. DEA efficient DMUs obtained from conventional DEA models create an efficient production frontier. Traditional DEA can be used to identify units with good performance in the most desirable scenarios. There is a similar approach that evaluates the performance indicators of each DMU using a set of most unfavourable weights. Accordingly, such models can be considered models for analysing the worst relative efficiency or pessimistic efficiency. This approach uses the inefficient production frontier for determining the worst relative efficiency that can be assigned to each DMU. DMUs lying on the inefficient production frontier are referred to as DEA inefficient while those neither on the efficient frontier nor on the inefficient frontier are declared DEA inefficient. It can be argued that both relative efficiencies should be considered simultaneously and any approach with only one of them would be biased. This paper proposed the integration of both efficiencies as an interval so that the overall performance score would belong to this interval. It was shown that efficiency interval provided more information than either of the two efficiencies, which was illustrated using two numerical examples.

Traditional data envelopment analysis (DEA) is used under the premise that inputs and outputs are exact values. If it is not true, the DEA approach is unavailable. However, it is common that some of the entries in the data are missing in practice. As a result, the current paper performs efficiency evaluation with missing data considering the missing-data properties (missing-data patterns and missing-data mechanisms). A multiple imputation (MI) approach is used to estimate the missing values. The MI approach is applied to a forest reorganisation problem for reliability. An example of public secondary schools is given to illustrate the proposed technique. When input or output values for decision making units (DMUs) continuously vary under an interval, the current paper characterises a DMU’s pessimistic and optimistic efficiency functions of an input or output of most interest. A Monte Carlo simulation technique is used to obtain a DMU’s efficiency distribution.

Efficiency evaluations with context-dependent and measure-specific data envelopment approaches: An application in a World Bank supported project

Data envelopment analysis (DEA) is a mathematical method based on production theory and the principles of linear programming. It enables one to assess how efficiently a firm, organization, agency, or such other unit uses the resources available (inputs) to generate a set of outputs relative to other units in the data set. Recent papers by different writers present different applications of DEA in the transportation engineering domain. All of these papers are published in transportation journals. These papers are mainly aimed at addressing the transportation-related issues and thus do not focus too much on the DEA concept itself. It can be asserted that DEA is very likely to be used more and more in the transportation engineering domain. Given this, there is a need for the transportation professionals to fully understand the DEA concept. It is essential for such a community to identify cases where the application of this innovative and powerful method can be useful to help the decision-making process, to accurately apply DEA in a particular setting, to derive meaningful conclusions from the obtained results, and to acknowledge the limitations of DEA in certain cases so as to approach the results with caution. The purpose of this paper is to illustrate to the civil engineering, more specifically to the transportation engineering community the use of this powerful approach in performing comparative performance measurement. Within this context, this paper will address a transportation-related problem by using the DEA approach. Different from the other papers containing transportation-related DEA applications (as mentioned above), this paper will discuss, in detail, the steps that need to be taken to generate the DEA model and solve it.

Production trade-offs represent simultaneous and possible changes to the inputs and outputs in the technology under consideration. However, since trade-offs are illative and subjective, in many real applications, the data of production trade-offs cannot be precisely measured. Occasionally, a crisp trade-off cannot reflect desirable judgment of expert. This paper develops the trade-off approach in data envelopment analysis (DEA) using imprecise trade-offs represented by fuzzy sets. We develop some fuzzy versions of trade-off DEA models by using some ranking methods based on the comparison of α-cuts. We show in numerical examples how our models become useful for detecting sensitive trade-offs. In other words, our approach can be seen as extension of the trade-off approach that provides users with models, which represent real evaluation of decision making units (DMU) with good judgments as possible trade-offs.

This paper examines the strategic fit of mergers and acquisitions (M&A) in Mozambican banks, using a two‐stage data envelopment analysis (DEA) approach to compute the impact of contextual variables on efficiency scores and returns to scale of the resulting virtual merged banks. In an ‘M&A DEA’ model, different pairs of bidder and target companies are considered. In the first stage an M&A DEA model is used. Simplex regression is adopted in the second stage. The results reveal that ownership (public or foreign) impacts virtual efficiency levels. However, the findings also show that care must be exercised with M&A because the resultant banking organization could be oversized when foreign ownership is predominant, especially when public ownership is low. Given the relative sizes of the markets in terms of productive resources, M&A involving Mozambican banks can easily lead to decreasing returns to scale. Thus, a greater emphasis should be given to merging purely public banks with foreign ones and vice versa.

PurposeThe purpose of this paper is to propose a benchmarking framework to evaluate the efficiency and effectiveness of the hotel industry, in a multi‐period context, with consideration of perishable traits and carry‐over activities. The sustained high performers in the case study are identified and their business strategies are discussed.Design/methodology/approachThe dynamic DEA (data envelopment analysis) approach is used to identify the multi‐period sustained high performers. The super‐efficiency DEA approach is employed to conduct a thorough ranking under an input‐output‐consumption structure. The supplementary analysis is further implemented to help elucidate the benchmarking results.FindingsIn total, nine out of 80 international tourist hotels in Taiwan during 2006‐2010 are identified as the sustained high performers. These hotels have diverged business strategies in terms of employees (intensive versus economical labor forces), products (room versus F&B (food and beverage) services), prices (extremely expensive versus very inexpensive room rates), guests (business versus tourism guests), and others (e.g. location advantages).Originality/valueThis study contributes to benchmarking literature and to hotel industry in several aspects. Compared with conventional single‐period benchmarking in efficiency aspect only, the proposed multi‐period benchmarking framework under input‐production‐consumption structure can take into account the carry‐over activities, account for perishable traits, provide more robust results, and add more useful information to facilitate the hotel managers to ameliorate the efficiency and effectiveness. The proposed framework should be readily applied to other service industries (e.g. transport).

A distance friction minimization approach in data envelopment analysis: A comparative study on airport efficiency

Maintenance effectiveness in manufacturing facilities is a critical factor in achieving significant competitive advantage. Consequently, attaining higher levels of maintenanceeffectiveness has recently become a primary goal for managers of world-class organizations. Tbis paper presents a study, which will demonstrate bow managers can identify best inclass performers in terms of maintenance and how to conduct an improvement analysis using data envelopment analysis (DEA) approach. Data on 13 paper mills collected from a large U.S manufacturing company arc used to identify low performers and determine wbich high performer plants to benchmark in order to improve their efficiency. A discussion of results is also presented. The emphasis of this paper is on tbe application.

A comparative analysis of DEA as a discrete alternative multiple criteria decision tool

The harmonious interaction between humans and the biosphere determines how sustainable existence and coexistence are. However, when social challenges appear, sustainability is heavily compromised. Health is one of the areas affected by such challenges, with the delivery of health services being ensured by health systems. Consequently, understanding how sustainable health services are, especially those that consume the majority of resources—hospitals—is indispensable for a sustainable future. For this reason, we propose using a hybrid data envelopment analysis (DEA) approach to study hospital sustainability in Portugal under environmental, social, and economic perspectives, in cooperation with the Portuguese Ministry of Health. In particular, the proposed methodology incorporates the preference information of decision makers (via the construction of utility scales and the determination of Möbius coefficients) and criteria interactivity, due to the integration of the Choquet multiple criteria preference aggregation model in the DEA approach. In the end, despite approximately 30% of the sampled 29 assessed hospitals were deemed as efficient across the three perspectives in 2018, only 1 was entirely sustainable.

The main aim of the study was to evaluate the efficiency of Islamic Azad University branches in East Azerbaijan using stochastic frontier analysis (SFA) and to compare the findings with the results of data envelopment analysis (DEA). In this respect, SFA and DEA techniques were applied to measure production efficiency of 28 branches of East Azerbaijan Islamic Azad University considering the following variables as either output or input: 3 variables as output (including the number of graduated students and students accepted for the further pursuit of their studies, as well as the number of articles, books, and research projects) and 6 variables as input (including the number of university faculty members, educational fields, current students, staff working in different sections of the university, and the total university campus in square meters as well as university costs). Estimation of DEA and obtaining of the units' efficiency indicated that the average efficiency of the universities under investigation were 0.66 and 0.80 in SFA and DEA techniques, respectively. In addition, efficiency distributions in SFA and DEA methods were tremendously different from each other so that in SFA method nearly 40% while in DEA method more than 60% of unit efficiency was between 0.8-1 intervals. The minimum level of estimated efficiency (0.14) was observed for Hadishahr using SFA method, and in DEA approach, the minimum level of efficiency belonged to Khoda Afarin branch (0.065).

Despite the establishment and revitalization of small-scale irrigation schemes, input subsidies and tractor hire schemes in the rural Eastern Cape Province of South Africa productivity among small-scale farmers is recorded low and anticipated to decline. For survival, small-scale farmers have resorted to cultivating high value crops including vegetables. However, their vegetable productivity is far less than the estimated potential yields, and information regarding their production efficiency is limited. Therefore, this study was aimed at determining farmer’s production efficiency to generate meaningful information necessary for designing feasible pro-poor policies aimed at catalysing increased the productivity and rural household incomes. The study was carried out at Qamata and Tyefu irrigation schemes, and approximately 158 farmers were interviewed. The Data Envelopment Analysis (DEA) approach was used to generate results. The findings in this article indicated that most farmers are old aged with low literacy levels. Farmers were also allocating few hectares of land for cabbage production with far less application of fertilizers and pesticides compared to the recommended amounts. Farmers at Qamata and Tyefu irrigation schemes are technically, allocatively and economically efficient at 98%, 72% and 77% level, respectively. Thus, for improving the productivity, farmers need to maintain the same technologies and adjust on the amounts of fertilizers, seeds and pesticides used for improving allocative and economic efficiency. Results suggested that this can be achieved through encouraging more youth participation in farming, improved input-agronomic and agribusiness skills, catalysing processes of land reforms, and construction of more dams.