Data envelopment analysis: a comprehensive text with models, by William Wager Cooper, Lawrence M. Seiford, Kaoru Tone

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By William Wager Cooper, Lawrence M. Seiford, Kaoru Tone

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1. Suggested Answer : Solutions to the first 2 problems involve treating nonlinear problems so we focus on this last problem. ” This solution is also optimal for the preceding problem with for Hospital B and for Hospital A. This reversal of efficiency ratings might lead to A responding by calculating his own best weights, and similarly for the other hospitals. A regulatory agency might then respond by going beyond such pairwise comparisons, in which case we could use an extension of the above approaches – to be described in succeeding chapters – which GENERAL DISCUSSION 17 effects such a “best rating” by considering all 12 hospitals simultaneously for each such evaluation.

Then, interpret your results. Suggestion: Be sure to normalize all results by dividing with the ratio for A, which is Notice that this division cancels all units of measure. ” 2. Assignment 2 The manager of Hospital B asks you to determine a set of weights which will improve its standing relative to A. 5 you could determine weights which bring B to a par with A by solving An easier route would be to solve the following problem. 16 DATA ENVELOPMENT ANALYSIS subject to with The choice of and should maximizes the ratio for Hospital B, so no better choice can be made from this manager’s standpoint.

We will analyze this problem later by using different DEA models. However, we assume that this line is effective in the range of interest and call it the constant returns-to-scale assumption. Compared with the best store B, the others are inefficient. 2. 4. 4 × 100% = 40% of B’s efficiency. , how to move them up to the efficient frontier. 3 can be improved in several ways. One is achieved by reducing the input (number of employees) to A1 with coordinates (1, 1) on the efficient frontier. Another is achieved by raising the output (sales in $100,000 units) up to Any point on the line segment offers a chance to effect the improvements in a manner which assumes that the input should not be increased and the output should not be decreased in making the store efficient.

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