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A cross-inefficiency approach based on the deviation variables framework

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  • Ebrahimi, Bohlool
  • Dhamotharan, Lalitha
  • Ghasemi, Mohammad Reza
  • Charles, Vincent

Abstract

This paper presents a solution to the problem of ranking efficient decision-making units (DMUs) in data envelopment analysis (DEA). We develop a cross-inefficiency approach for the deviation variables framework based on a pair of epsilon-based benevolent and aggressive models for both constant and variable returns-to-scale technologies. The new method improves the discriminating power of DEA, solves the non-uniqueness of ranking solutions, and avoids the negative efficiency scores associated with current models in the deviation variables framework. We illustrate the performance of the approach using a real-life case study. Not only does the research improve the discriminating power, but it also encourages the first step towards integrating the deviation variables framework in the context of decision-making uncertainty.

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  • Ebrahimi, Bohlool & Dhamotharan, Lalitha & Ghasemi, Mohammad Reza & Charles, Vincent, 2022. "A cross-inefficiency approach based on the deviation variables framework," Omega, Elsevier, vol. 111(C).
    • Handle: RePEc:eee:jomega:v:111:y:2022:i:c:s0305048322000755
    DOI: 10.1016/j.omega.2022.102668
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