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Title: Efficiency analysis with ratio measures
Authors: Olesen, Ole Bent
Petersen, Niels Christian
Podinovski, Victor V.
Keywords: Data envelopment analysis
Production assumptions
Ratio measures
Issue Date: 2015
Publisher: © Elsevier B.V.
Citation: OLESEN, O.B., PETERSEN, N.C. and PODINOVSKI, V.V., 2015. Efficiency analysis with ratio measures. European Journal of Operational Research, 245 (2), pp.446–462
Abstract: In applications of data envelopment analysis (DEA) data about some inputs and outputs is often available only in the form of ratios such as averages and percentages. In this paper we provide a positive answer to the long-standing debate as to whether such data could be used in DEA. The problem arises from the fact that ratio measures generally do not satisfy the standard production assumptions, e.g., that the technology is a convex set. Our approach is based on the formulation of new production assumptions that explicitly account for ratio measures. This leads to the estimation of production technologies under variable and constant returns-to-scale assumptions in which both volume and ratio measures are native types of data. The resulting DEA models allow the use of ratio measures “as is”, without any transformation or use of the underlying volume measures. This provides theoretical foundations for the use of DEA in applications where important data is reported in the form of ratios.
Description: This paper was accepted for publication in the journal European Journal of Operational Research and the definitive published version is available at http://dx.doi.org/10.1016/j.ejor.2015.03.013.
Version: Accepted for publication
DOI: 10.1016/j.ejor.2015.03.013
URI: https://dspace.lboro.ac.uk/2134/18163
Publisher Link: http://dx.doi.org/10.1016/j.ejor.2015.03.013
ISSN: 0377-2217
Appears in Collections:Published Articles (Business)

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