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A Common Set of Weights for Ranking Decision-Making Units with Undesirable Outputs: A Double Frontiers Data Envelopment Analysis Approach

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  • Lei Chen

    (Decision Science Institute, School of Economics & Management, Fuzhou University, Fuzhou 350116, P. R. China2College of Business, University of Southern Mississippi, Hattiesburg, MS 39406, United States)

  • Fei-Mei Wu

    (School of Economics and Management, Minjiang University, Fuzhou 350108, P. R. China)

  • Feng Feng

    (Institute of Quantitative & Technical Economics, Chinese Academy of Social Sciences, Beijing 100732, P. R. China)

  • Fujun Lai

    (College of Business, University of Southern Mississippi, Hattiesburg, MS 39406, United States5Research Center for Smarter Supply Chain, School of Business, Soochow University, Suzhou 215012, P. R. China)

  • Ying-Ming Wang

    (Decision Science Institute, School of Economics & Management, Fuzhou University, Fuzhou 350116, P. R. China)

Abstract

Major drawbacks of the traditional data envelopment analysis (DEA) method include selecting optimal weights in a flexible manner, lacking adequate discrimination power for efficient decision-making units, and considering only desirable outputs. By introducing the concept of global efficiency optimization, this study proposed a double frontiers DEA approach with undesirable outputs to generate a common set of weights for evaluating all decision-making units from both the optimistic and pessimistic perspectives. For a unique optimal solution, compromise models for individual efficiency optimization were developed as a secondary goal. Finally, as an illustration, the models were applied to evaluate the energy efficiency of the Chinese regional economy. The results showed that the proposed approach could improve discrimination power and obtain a fair result in a case where both desirable and undesirable outputs exist.

Suggested Citation

  • Lei Chen & Fei-Mei Wu & Feng Feng & Fujun Lai & Ying-Ming Wang, 2018. "A Common Set of Weights for Ranking Decision-Making Units with Undesirable Outputs: A Double Frontiers Data Envelopment Analysis Approach," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 35(06), pages 1-25, December.
    • Handle: RePEc:wsi:apjorx:v:35:y:2018:i:06:n:s0217595918500392
    DOI: 10.1142/S0217595918500392
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    2. Kiani Mavi, Reza & Kiani Mavi, Neda & Farzipoor Saen, Reza & Goh, Mark, 2022. "Common weights analysis of renewable energy efficiency of OECD countries," Technological Forecasting and Social Change, Elsevier, vol. 185(C).

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