MODELS FOR IMPROVED EFFECTIVENESS BASED ON DEA EFFICIENCY RESULTS

Abstract

Abstract Following the characterization via Data Envelopment Analysis (DEA) of managerial units as efficient or inefficient, management will wish to increase profitability and/or control costs while becoming (or remaining) technically efficient in the DEA sense. This paper presents three families of models for achieving this and describes the managerial situations in which they are useful. The first addresses the management of an existing Decision Making Unit (DMU) and die second attempts to identify the desired “location” for a new DMU. The third addresses the aggregate of all DMUs, reallocating scarce resources among them for maximum overall organizational profitability and technical efficiency.