A UNIVERSAL SOLUTION FOR UNITS - INVARIANCE IN DATA ENVELOPMENT ANALYSIS

  • Jin XU China Center for Health Development Studies Peking University, Beijing, China
  • Panagiotis D. ZERVOPOULOS China Center for Health Development Studies Peking University, Beijing, China Department of Business Administration of Food and Agricultural Enterprises University of Ioannina, Agrinio, Greece
  • Zhenhua QIAN School of Social Science University of Science and Technology Beijing, China
  • Gang CHENG China Center for Health Development Studies Peking University, Beijing, China

Abstract

The directional distance function model is a generalization of the radial model in data envelopment analysis (DEA). The directional distance function model is appropriate for dealing with cases where undesirable outputs exist. However, it is not a units-invariant measure of efficiency, which limits its accuracy. In this paper, we develop a data normalization method for DEA, which is a universal solution for the problem of units-invariance in DEA. The efficiency scores remain unchanged when the original data are replaced with the normalized data in the existing units-invariant DEA models, including the radial and slack-based measure models, i.e., the data normalization method is compatible with the radial and slack-based measure models. Based on normalized data, a units-invariant efficiency measure for the directional distance function model is defined.

References

References
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Published
2017-06-12
How to Cite
XU, Jin et al. A UNIVERSAL SOLUTION FOR UNITS - INVARIANCE IN DATA ENVELOPMENT ANALYSIS. Theoretical and Practical Research in the Economic Fields, [S.l.], v. 3, n. 2, p. 121-128, june 2017. ISSN 2068-7710. Available at: <https://journals.aserspublishing.eu/tpref/article/view/1173>. Date accessed: 22 jan. 2022.