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Decisional performance efficiencies of cross-efficiency DEA decision-making units using benevolent criterion

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  • Parag C. Pendharkar

    (Pennsylvania State University at Harrisburg)

Abstract

This paper uses the maximum decisional efficiency (MDE) principle to rank decisional performance efficiencies of cross-efficiency (CE) data envelopment analysis (DEA) decision-making units (DMUs) that use benevolent criterion. Under the benevolent criterion, each DMU independently selects a set of common weights to maximize the average peer efficiency scores. The performance of each DMU in selecting the set of common weights is called the decisional performance efficiency (DPE) of the DMU. The DPEs of all DMUs are assumed to be distributed as a monotone increasing probability density function (pdf) of unknown parameters. A maximum-likelihood (ML) approach using a genetic algorithm is used to learn the parameters of the pdf. Once the underlying parameters of the pdf are known, DPEs can be computed and the DMUs can be ranked based on their DPEs. Additionally, the Markov Chain Monte Carlo technique can be applied to establish confidence interval bounds on the ML parameter describing the MDE pdf. Three examples using datasets from the literature are provided.

Suggested Citation

  • Parag C. Pendharkar, 2025. "Decisional performance efficiencies of cross-efficiency DEA decision-making units using benevolent criterion," Operational Research, Springer, vol. 25(1), pages 1-29, March.
    • Handle: RePEc:spr:operea:v:25:y:2025:i:1:d:10.1007_s12351-024-00890-1
    DOI: 10.1007/s12351-024-00890-1
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    References listed on IDEAS

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    1. Golany, B & Roll, Y, 1989. "An application procedure for DEA," Omega, Elsevier, vol. 17(3), pages 237-250.
    2. Pendharkar, Parag C., 2006. "Scale economies and production function estimation for object-oriented software component and source code documentation size," European Journal of Operational Research, Elsevier, vol. 172(3), pages 1040-1050, August.
    3. 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.
    4. M.D. Troutt, 1997. "Derivation of the Maximin Efficiency Ratio model from the maximum decisional efficiency principle," Annals of Operations Research, Springer, vol. 73(0), pages 323-338, October.
    5. Pendharkar, Parag C. & Koehler, Gary J., 2007. "A general steady state distribution based stopping criteria for finite length genetic algorithms," European Journal of Operational Research, Elsevier, vol. 176(3), pages 1436-1451, February.
    6. Jin, Feifei & Cai, Yuhang & Zhou, Ligang & Ding, Tao, 2023. "Regret-rejoice two-stage multiplicative DEA models-driven cross-efficiency evaluation with probabilistic linguistic information," Omega, Elsevier, vol. 117(C).
    7. Marvin D. Troutt, 1995. "A Maximum Decisional Efficiency Estimation Principle," Management Science, INFORMS, vol. 41(1), pages 76-82, January.
    8. Pendharkar, Parag C., 2021. "Allocating fixed costs using multi-coalition epsilon equilibrium," International Journal of Production Economics, Elsevier, vol. 239(C).
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