Basic DEA Models
All business operations/processes involve transformation — adding values and changes to materials and turning them into goods and services that customers want. The transformation involves the use of inputs made up of labor, materials, energy, machines, and other resources, and the generation of outputs of finished products, services, customer satisfaction, and other outcomes. Consider hospital operations, for example. The inputs include doctors, nurses, medical supplies, equipment, laboratories, beds and others, and outputs include number of patients treated, number of interns and residents trained, and others. Managers are often interested in evaluating how efficiently various processes operate with respect to multiple inputs and outputs. For example, in a buyer-seller supply chain, the buyer may be interested in comparing the performance of several sellers with respect to response time, costs, flexibility, customer service, quality, and customization. Eliminating or improving inefficient operations decreases the cost of inputs and increases productivity. Performance evaluation and benchmarking help business operations/processes to become more productive.
KeywordsData Envelopment Analysis Efficiency Score Data Envelopment Analysis Model Efficient Frontier Solver Parameter
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