Monday, May 30, 2016

Data Envelopment Analysis (DEA) - ppt and practice problems..

Data Envelopment Analysis is an Operations Research Tool that helps to find the relative efficiency between different Decision Making Units (DMU) in a setup.

Originally it is the idea from Charnes, Cooper and Rhodes who did a brilliant job using Linear Programming Problem formulation for a non-linear efficiency problem.

You will find some of the links here of some interest. Depending on the number of DMUs, you have to formulate as much LPPs. Hence manual solution may be difficult considering that one has multiple inputs and multiple outputs,

A spreadsheet solver (LP solver in Excel) or the solver in Google spreadsheet can be used.

Some links are given here .

ppt : 

another LP solver tutorial youtube video (how to formulate)

Explains the computer solution of LPP by using LP solver , youtube video ..

points to ponder :

1. why is the initial efficiency obj function considered non-linear ?
2. How is the non-linear function converted to a linear function ?



  1. Sir, found the following additional, you may add in the blog if found relevant

  2. Linear function is an equation whose graph can be expressed as a straight line; example y= a + bx is a linear function; y= dependent variable and x=independent variable;
    Initial objective function is non linear because ???
    a. relative weights assigned to each inputs and outputs
    b. Conservative view of DEA that gives benefit of doubt to each unit being evaluated; this means that inefficiency calculated is less than actual inefficiency.
    Perhaps this is why initial function is considered non linear (not sure though ..:)


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