Ranking Efficient DMUs in DEA based on System-Wide Performance: Directional Distance Function Approach
Keywords:
Data envelopment analysis, Efficiency, Ranking, Directional distance function, Directional slack-based measure, System-wide directional slack-based measureAbstract
In Data Envelopment Analysis (DEA), efficiency score can be a criterion for ranking inefficient Decision Making Units (DMUs). However, this criterion cannot rank efficient DMUs. This research proposes a methodology for ranking extreme and nonextreme efficient DMUs. The proposed method, based upon the influence of the individual DMUs’ performances on the system-wide performance, has many attractive properties and successfully overcomes some difficulties in ranking methods. First, a so-called Directional Slack-Based Measure (DSBM) is presented to measure system-wide performance using the directional distance function. Then, by employing this measure, a so-called system-wide DSBM is developed that is a generalization of the approach presented by Cooper et al. [22]. The main idea behind our proposed method is that the more the omission has influence (increase) on the system-wide performance, the better performance. Two illustrative examples compare the proposed method with other ranking methods.
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