Relationships between data envelopment analysis and multicriteria decision analysis

This paper contrasts the different approaches of Data Envelopment Analysis (DEA) and Multiple Criteria Decision Making (MCDM) to superficially similar problems. The concepts of efficiency and Pareto optimality in DEA and MCDM are compared, and a link is demonstrated between the ratio efficiency definition in DEA and a distance measure in input-output space based on linear value functions. The problem of weight sensitivity is discussed in terms of value measurement theory, highlighting the assumptions needed during model formulation in order to justify the use of value judgments to constrain weight flexibility in DEA. Finally, the paper proposes a stochastic approach, in which a probability distribution on efficiencies can be derived for each decision making unit, as a basis for comparison.