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Ranking using η-efficiency and relative size measures based on DEA

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  • Kanematsu, Simon Y.
  • Carvalho, Ney P.
  • Martinhon, Carlos A.
  • Almeida, Mariana R.

Abstract

In this paper, we propose a new way to define the size of organizations or Decision Making Units (DMUs) based on Data Envelopment Analysis (DEA). A great number of managerial decisions, social and economic activities, political analysis and engineering process include in their analysis some information about the size of corporations. Usually, organizations consider particular attributes such as revenues, employees, number of clients, profit and so forth to evaluate their sizes, which could result on an incomplete and/or partial size evaluation. Here, we investigate this question more deeply and propose a non-parametric approach for ranking size. To address this issue, we first construct a DEA super-efficiency target vector defined over an extended Technology set and find a common set of weights to determine new efficiencies and sizes, possibly greater than one. After, we define rotation and translation of DMUs and show how to construct a range area, associated to η-efficiencies and relative sizes that are less than or equal to one. Additionally, based on managerial decisions, we show how to use these ideas to achieve new η-efficiency and relative size goals for one or more DMUs in the set. We consider an empirical application to illustrate our approach on a dataset of international airlines and conclude the paper with some final remarks and future directions.

Suggested Citation

  • Kanematsu, Simon Y. & Carvalho, Ney P. & Martinhon, Carlos A. & Almeida, Mariana R., 2020. "Ranking using η-efficiency and relative size measures based on DEA," Omega, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:jomega:v:90:y:2020:i:c:s0305048318304304
    DOI: 10.1016/j.omega.2018.10.014
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