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The explicit role of weight bounds in models of data envelopment analysis

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  • V V Podinovski

    (University of Warwick, Coventry)

Abstract

In this paper, we suggest that weight bounds used in models of data envelopment analysis (DEA) can be assessed using production trade-offs between inputs and outputs. This development is based on a transformation of the envelopment DEA model to a special form, which exhibits an explicit link between weight bounds and production trade-offs. This allows us to specify the guidelines to the construction of weight bounds, which ensure that the envelopment form has a clear economic meaning. In this development, the radial efficiency measure retains its standard meaning as a technologically realistic improvement factor. This contrasts with the methods based on value judgements for which this traditional meaning of efficiency becomes void. We show that the exact economic meaning of the same weight bounds depends on the unit under the assessment and the orientation (input-minimization or output-maximization) of the model. The suggested approach is valid under the assumptions of constant and variable returns to scale.

Suggested Citation

  • V V Podinovski, 2005. "The explicit role of weight bounds in models of data envelopment analysis," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(12), pages 1408-1418, December.
    • Handle: RePEc:pal:jorsoc:v:56:y:2005:i:12:d:10.1057_palgrave.jors.2601969
    DOI: 10.1057/palgrave.jors.2601969
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    References listed on IDEAS

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    1. 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.
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    7. Podinovski, V. V., 2004. "Suitability and redundancy of non-homogeneous weight restrictions for measuring the relative efficiency in DEA," European Journal of Operational Research, Elsevier, vol. 154(2), pages 380-395, April.
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    Cited by:

    1. Podinovski, V.V., 2007. "Computation of efficient targets in DEA models with production trade-offs and weight restrictions," European Journal of Operational Research, Elsevier, vol. 181(2), pages 586-591, September.
    2. Khalili, M. & Camanho, A.S. & Portela, M.C.A.S. & Alirezaee, M.R., 2010. "The measurement of relative efficiency using data envelopment analysis with assurance regions that link inputs and outputs," European Journal of Operational Research, Elsevier, vol. 203(3), pages 761-770, June.
    3. Finn Førsund, 2013. "Weight restrictions in DEA: misplaced emphasis?," Journal of Productivity Analysis, Springer, vol. 40(3), pages 271-283, December.
    4. Ahti Salo & Antti Punkka, 2011. "Ranking Intervals and Dominance Relations for Ratio-Based Efficiency Analysis," Management Science, INFORMS, vol. 57(1), pages 200-214, January.
    5. Liesiö, Juuso & Andelmin, Juho & Salo, Ahti, 2020. "Efficient allocation of resources to a portfolio of decision making units," European Journal of Operational Research, Elsevier, vol. 286(2), pages 619-636.
    6. Podinovski, Victor V. & Bouzdine-Chameeva, Tatiana, 2015. "Consistent weight restrictions in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 244(1), pages 201-209.
    7. Podinovski, Victor V., 2016. "Optimal weights in DEA models with weight restrictions," European Journal of Operational Research, Elsevier, vol. 254(3), pages 916-924.
    8. Giannis Karagiannis & Panagiotis Ravanos, 2023. "On Value Efficiency Analysis and Cone-Ratio Data Envelopment Analysis models," Discussion Paper Series 2023_03, Department of Economics, University of Macedonia, revised Mar 2023.
    9. Somayeh Razipour-GhalehJough & Farhad Hosseinzadeh Lotfi & Gholamreza Jahanshahloo & Mohsen Rostamy-malkhalifeh & Hamid Sharafi, 2020. "Finding closest target for bank branches in the presence of weight restrictions using data envelopment analysis," Annals of Operations Research, Springer, vol. 288(2), pages 755-787, May.
    10. Podinovski, Victor V., 2017. "Returns to scale in convex production technologies," European Journal of Operational Research, Elsevier, vol. 258(3), pages 970-982.
    11. Aldanondo, Ana M. & Casasnovas, Valero L., 2016. "A note on the impact of multiple input aggregators in technical efficiency estimation," MPRA Paper 75290, University Library of Munich, Germany.
    12. Panagiotis Ravanos & Giannis Karagiannis, 2023. "On VEA, production trade-offs and weights restrictions," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 74(10), pages 2081-2093, October.
    13. Podinovski, Victor V. & Bouzdine-Chameeva, Tatiana, 2017. "Solving DEA models in a single optimization stage: Can the non-Archimedean infinitesimal be replaced by a small finite epsilon?," European Journal of Operational Research, Elsevier, vol. 257(2), pages 412-419.
    14. Victor V. Podinovski & Wan Rohaida Wan Husain, 2017. "The hybrid returns-to-scale model and its extension by production trade-offs: an application to the efficiency assessment of public universities in Malaysia," Annals of Operations Research, Springer, vol. 250(1), pages 65-84, March.
    15. S P Santos & C A F Amado & J R Rosado, 2011. "Formative evaluation of electricity distribution utilities using data envelopment analysis," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(7), pages 1298-1319, July.
    16. Podinovski, Victor V. & Bouzdine-Chameeva, Tatiana, 2016. "On single-stage DEA models with weight restrictions," European Journal of Operational Research, Elsevier, vol. 248(3), pages 1044-1050.
    17. V V Podinovski, 2007. "Improving data envelopment analysis by the use of production trade-offs," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 58(10), pages 1261-1270, October.
    18. Kadziński, Miłosz & Labijak, Anna & Napieraj, Małgorzata, 2017. "Integrated framework for robustness analysis using ratio-based efficiency model with application to evaluation of Polish airports," Omega, Elsevier, vol. 67(C), pages 1-18.
    19. Victor V. Podinovski & Tatiana Bouzdine-Chameeva, 2013. "Weight Restrictions and Free Production in Data Envelopment Analysis," Operations Research, INFORMS, vol. 61(2), pages 426-437, April.

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