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Data Envelopment Analysis on a Relaxed Set of Assumptions

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  • Niels Christian Petersen

    (Department of Management, Odense University, Campusvej 55, DK 5230 Odense M, Denmark)

Abstract

Data Envelopment Analysis is a procedure for evaluation of the relative efficiency of units in a production system. DEA involves construction of composite units as convex combinations of other units' inputs and outputs under various conditions related to returns to scale. The assumption of convexity is inconsistent with increasing returns to scale and not implied by constant or non-increasing returns to scale. An alternative DEA approach which does not invoke the assumption of a convex production possibility set is developed in this paper. It is implemented in two stages. Stage one is concerned with the spanning of isoquants and stage two with an evaluation of the position of an observed input-output combination compared to the isoquants. Both stages involve linear programming techniques solely.

Suggested Citation

  • Niels Christian Petersen, 1990. "Data Envelopment Analysis on a Relaxed Set of Assumptions," Management Science, INFORMS, vol. 36(3), pages 305-314, March.
    • Handle: RePEc:inm:ormnsc:v:36:y:1990:i:3:p:305-314
    DOI: 10.1287/mnsc.36.3.305
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