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Production trade-offs and weight restrictions in data envelopment analysis

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  • V V Podinovski

    (University of Warwick)

Abstract

In this paper we suggest two equivalent ways in which the information about production trade-offs between the inputs and outputs can be incorporated into the models of data envelopment analysis (DEA). Firstly, this can be implemented by modifying envelopment DEA models. Secondly, the same information can be captured using weight restrictions in multiplier DEA models. Unlike other methods used for the assessment of weight restrictions, for example those based on value judgements or monetary considerations, the trade-off approach developed in this paper ensures that the radial target of any inefficient unit is technologically realistic and, therefore, the efficiency measure retains its traditional meaning of the extreme radial improvement factor. In other words, this paper suggests that ‘technology thinking’ could be used instead of ‘value thinking’ in the construction of weight restrictions, which offers real practical advantages. The method is equally applicable to the models under constant and variable returns-to-scale assumptions.

Suggested Citation

  • V V Podinovski, 2004. "Production trade-offs and weight restrictions in data envelopment analysis," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 55(12), pages 1311-1322, December.
    • Handle: RePEc:pal:jorsoc:v:55:y:2004:i:12:d:10.1057_palgrave.jors.2601794
    DOI: 10.1057/palgrave.jors.2601794
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    References listed on IDEAS

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