Projections Onto Efficient Frontiers: Theoretical and Computational Extensions to D.E.A.
Posted: 7 May 1998
Date Written: Undated
Data Envelopment Analysis (D.E.A.) has been widely studied in the literature since its inception in 1978. The methodology behind the classical D.E.A., the oriented method, is to hold inputs (outputs) constant and to determine how much of an improvement in the output (input) dimensions is necessary in order to become efficient. This paper extends this methodology in two substantive ways. First, a method is developed that determines the shortest projection from an inefficient D.M.U. to the efficient frontier in both the input and output space simultaneously, and second, introduces the notion of the +observable frontier and its subsequent projection. The observable frontier is the portion of the frontier that has been experienced by other D.M.U. s and thus, the projection onto this portion of the frontier guarantees a recommendation that has already been demonstrated by an existing D.M.U. or a convex combination of existing D.M.U. s. A numerical example is used to illustrate the importance of these two methodological extensions.
JEL Classification: C40
Suggested Citation: Suggested Citation