IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v214y2014i1p125-14110.1007-s10479-012-1091-8.html
   My bibliography  Save this article

Interactive classification using data envelopment analysis

Author

Listed:
  • Parag Pendharkar
  • Marvin Troutt

Abstract

In this paper, we illustrate how data envelopment analysis (DEA) can be used to aid interactive classification. We assume that the scoring function for the classification problem is known. We use DEA to identify difficult to classify cases from a database and present them to the decision-maker one at a time. The decision-maker assigns a class to the presented case and based on the decision-maker class assignment, a tradeoff cutting plane is drawn using the scoring function and decision-maker’s input. The procedure continues for finite number of iterations and terminates with the final discriminant function. We also show how a hybrid DEA and mathematical programming approach can be used when user interaction is not desired. For non-interactive case, we compare a hybrid DEA and mathematical programming based approach with several statistical and machine learning approaches, and show that the hybrid approach provides competitive performance when compared to the other machine learning approaches. Copyright Springer Science+Business Media, LLC 2014

Suggested Citation

  • Parag Pendharkar & Marvin Troutt, 2014. "Interactive classification using data envelopment analysis," Annals of Operations Research, Springer, vol. 214(1), pages 125-141, March.
  • Handle: RePEc:spr:annopr:v:214:y:2014:i:1:p:125-141:10.1007/s10479-012-1091-8
    DOI: 10.1007/s10479-012-1091-8
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10479-012-1091-8
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1007/s10479-012-1091-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Robert Pavur & Pradit Wanarat & Constantine Loucopoulos, 1997. "Examination of the classificatory performance of MIP models with secondary goals for the two-group discriminant problem," Annals of Operations Research, Springer, vol. 74(0), pages 173-189, November.
    2. Edward I. Altman, 1968. "The Prediction Of Corporate Bankruptcy: A Discriminant Analysis," Journal of Finance, American Finance Association, vol. 23(1), pages 193-194, March.
    3. Ognian Asparoukhov & Antonie Stam, 1997. "Mathematical programming formulations for two-group classification with binary variables," Annals of Operations Research, Springer, vol. 74(0), pages 89-112, November.
    4. Richard Gallagher & Eva Lee & David Patterson, 1997. "Constrained discriminant analysis via 0/1 mixed integer programming," Annals of Operations Research, Springer, vol. 74(0), pages 65-88, November.
    5. Paul Rubin, 1997. "Solving mixed integer classification problems by decomposition," Annals of Operations Research, Springer, vol. 74(0), pages 51-64, November.
    6. A. M. Geoffrion & J. S. Dyer & A. Feinberg, 1972. "An Interactive Approach for Multi-Criterion Optimization, with an Application to the Operation of an Academic Department," Management Science, INFORMS, vol. 19(4-Part-1), pages 357-368, December.
    7. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    8. A. Duarte Silva & Antonie Stam, 1997. "A mixed integer programming algorithm for minimizing the training sample misclassification cost in two-group classification," Annals of Operations Research, Springer, vol. 74(0), pages 129-157, November.
    9. Zhimin Huang & Susan Li, 2001. "Stochastic DEA Models With Different Types of Input-Output Disturbances," Journal of Productivity Analysis, Springer, vol. 15(2), pages 95-113, March.
    10. Marvin D. Troutt, 1995. "A Maximum Decisional Efficiency Estimation Principle," Management Science, INFORMS, vol. 41(1), pages 76-82, January.
    11. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    12. Ohlson, Ja, 1980. "Financial Ratios And The Probabilistic Prediction Of Bankruptcy," Journal of Accounting Research, Wiley Blackwell, vol. 18(1), pages 109-131.
    13. Anil Gaba & W. Kip Viscusi, 1998. "Differences in Subjective Risk Thresholds: Worker Groups as an Example," Management Science, INFORMS, vol. 44(6), pages 801-811, June.
    14. Marvin D. Troutt, 1994. "Direction-Specific Gradient Scaling for Interactive Multicriterion Optimization Using an Abstract Mass Concept," Operations Research, INFORMS, vol. 42(6), pages 1110-1119, December.
    15. Fred M. Feinberg & Joel Huber, 1996. "A Theory of Cutoff Formation Under Imperfect Information," Management Science, INFORMS, vol. 42(1), pages 65-84, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Qiwei Xie & Xi Chen & Lin Li & Kaifeng Rao & Luo Tao & Chao Ma, 2019. "Image Fusion Based on Kernel Estimation and Data Envelopment Analysis," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 18(02), pages 487-515, March.
    2. Valero-Carreras, Daniel & Aparicio, Juan & Guerrero, Nadia M., 2021. "Support vector frontiers: A new approach for estimating production functions through support vector machines," Omega, Elsevier, vol. 104(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pedro Duarte Silva, A., 2017. "Optimization approaches to Supervised Classification," European Journal of Operational Research, Elsevier, vol. 261(2), pages 772-788.
    2. Ioannis Tsolas, 2015. "Firm credit risk evaluation: a series two-stage DEA modeling framework," Annals of Operations Research, Springer, vol. 233(1), pages 483-500, October.
    3. Jamal Ouenniche & Kaoru Tone, 2017. "An out-of-sample evaluation framework for DEA with application in bankruptcy prediction," Annals of Operations Research, Springer, vol. 254(1), pages 235-250, July.
    4. Mohammad Mahdi Mousavi & Jamal Ouenniche, 2018. "Multi-criteria ranking of corporate distress prediction models: empirical evaluation and methodological contributions," Annals of Operations Research, Springer, vol. 271(2), pages 853-886, December.
    5. Mousavi, Mohammad M. & Ouenniche, Jamal & Xu, Bing, 2015. "Performance evaluation of bankruptcy prediction models: An orientation-free super-efficiency DEA-based framework," International Review of Financial Analysis, Elsevier, vol. 42(C), pages 64-75.
    6. Ming-Fu Hsu & Ying-Shao Hsin & Fu-Jiing Shiue, 2022. "Business analytics for corporate risk management and performance improvement," Annals of Operations Research, Springer, vol. 315(2), pages 629-669, August.
    7. Róbert Štefko & Jarmila Horváthová & Martina Mokrišová, 2020. "Bankruptcy Prediction with the Use of Data Envelopment Analysis: An Empirical Study of Slovak Businesses," JRFM, MDPI, vol. 13(9), pages 1-15, September.
    8. Premachandra, I.M. & Bhabra, Gurmeet Singh & Sueyoshi, Toshiyuki, 2009. "DEA as a tool for bankruptcy assessment: A comparative study with logistic regression technique," European Journal of Operational Research, Elsevier, vol. 193(2), pages 412-424, March.
    9. Giordani, Paolo & Jacobson, Tor & Schedvin, Erik von & Villani, Mattias, 2014. "Taking the Twists into Account: Predicting Firm Bankruptcy Risk with Splines of Financial Ratios," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 49(4), pages 1071-1099, August.
    10. Li, Chunyu & Lou, Chenxin & Luo, Dan & Xing, Kai, 2021. "Chinese corporate distress prediction using LASSO: The role of earnings management," International Review of Financial Analysis, Elsevier, vol. 76(C).
    11. Lauren Stagnol, 2015. "Designing a corporate bond index on solvency criteria," EconomiX Working Papers 2015-39, University of Paris Nanterre, EconomiX.
    12. Lin, Hsiou-Wei William & Lo, Huai-Chun & Wu, Ruei-Shian, 2016. "Modeling default prediction with earnings management," Pacific-Basin Finance Journal, Elsevier, vol. 40(PB), pages 306-322.
    13. Asparoukhov, Ognian K. & Krzanowski, Wojtek J., 2001. "A comparison of discriminant procedures for binary variables," Computational Statistics & Data Analysis, Elsevier, vol. 38(2), pages 139-160, December.
    14. Chiara Pederzoli & Grid Thoma & Costanza Torricelli, 2013. "Modelling Credit Risk for Innovative SMEs: the Role of Innovation Measures," Journal of Financial Services Research, Springer;Western Finance Association, vol. 44(1), pages 111-129, August.
    15. Enrico Supino & Nicola Piras, 2022. "Le performance dei modelli di credit scoring in contesti di forte instabilit? macroeconomica: il ruolo delle Reti Neurali Artificiali," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2022(2), pages 41-61.
    16. Eling, Martin & Jia, Ruo, 2018. "Business failure, efficiency, and volatility: Evidence from the European insurance industry," International Review of Financial Analysis, Elsevier, vol. 59(C), pages 58-76.
    17. Maria H. Kim & Graham Partington, 2015. "Dynamic forecasts of financial distress of Australian firms," Australian Journal of Management, Australian School of Business, vol. 40(1), pages 135-160, February.
    18. Le, Hong Hanh & Viviani, Jean-Laurent, 2018. "Predicting bank failure: An improvement by implementing a machine-learning approach to classical financial ratios," Research in International Business and Finance, Elsevier, vol. 44(C), pages 16-25.
    19. Lillian Cheung & Amnon Levy, 1998. "An integrative analysis of business bankruptcy in Australia," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 22(2), pages 149-167, June.
    20. Mohsen Afsharian & Anna Kryvko & Peter Reichling, 2011. "Efficiency and Its Impact on the Performance of European Commercial Banks," FEMM Working Papers 110018, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:214:y:2014:i:1:p:125-141:10.1007/s10479-012-1091-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.