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Output-specific input-assurance regions in DEA

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  • W D Cook

    (York University)

  • J Zhu

    (Worcester Polytechnic Institute)

Abstract

The use of assurance region (AR) constraints to restrict multipliers in data envelopment analysis (DEA) is well-established, and has been discussed at length in the literature. The conventional assumption in imposing such restrictions is that they apply universally. Specifically, AR constraints on input multipliers are intended to control the relative importance of the individual inputs in terms of how they impact the entire bundle of outputs. In many settings the relative importance of inputs is different for some of the outputs than for others. A typical example of this in the financial services sector is where the importance of sales staff versus service staff is different in regard to sales outputs than is true for service outputs. In this paper we develop a general DEA framework that incorporates multiple input-AR structures that cater to multiple output classes. We examine the cases of both divisible and indivisible inputs, and as well as mutually exclusive and overlapping output sets. The concepts are applied to a financial services situation.

Suggested Citation

  • W D Cook & J Zhu, 2011. "Output-specific input-assurance regions in DEA," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(10), pages 1881-1887, October.
    • Handle: RePEc:pal:jorsoc:v:62:y:2011:i:10:d:10.1057_jors.2010.150
    DOI: 10.1057/jors.2010.150
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    References listed on IDEAS

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    1. Charnes, A. & Cooper, W. W. & Huang, Z. M. & Sun, D. B., 1990. "Polyhedral Cone-Ratio DEA Models with an illustrative application to large commercial banks," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 73-91.
    2. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    3. Wade Cook & Moez Hababou & Hans Tuenter, 2000. "Multicomponent Efficiency Measurement and Shared Inputs in Data Envelopment Analysis: An Application to Sales and Service Performance in Bank Branches," Journal of Productivity Analysis, Springer, vol. 14(3), pages 209-224, November.
    4. Thompson, Russell G. & Langemeier, Larry N. & Lee, Chih-Tah & Lee, Euntaik & Thrall, Robert M., 1990. "The role of multiplier bounds in efficiency analysis with application to Kansas farming," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 93-108.
    5. William W. Cooper & Lawrence M. Seiford & Kaoru Tone, 2006. "Introduction to Data Envelopment Analysis and Its Uses," Springer Books, Springer, number 978-0-387-29122-2, October.
    6. Cook, Wade D. & Hababou, Moez, 2001. "Sales performance measurement in bank branches," Omega, Elsevier, vol. 29(4), pages 299-307, August.
    7. A. Charnes & W. W. Cooper, 1962. "Programming with linear fractional functionals," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 9(3‐4), pages 181-186, September.
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