Sensitivity analysis of Data Envelopment Analysis models for simultaneous changes in all the data

Sensitivity analysis of Data Envelopment Analysis models for simultaneous changes in all the data

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Article ID: iaor19992698
Country: United Kingdom
Volume: 49
Issue: 10
Start Page Number: 1060
End Page Number: 1071
Publication Date: Oct 1998
Journal: Journal of the Operational Research Society
Authors: ,
Abstract:

In data envelopment analysis (DEA) efficient decision making units (DMUs) are of primary importance as they define the efficient frontier. The current paper develops a new sensitivity analysis approach for the basic DEA models, such as those proposed by Charnes et al, Banker et al and additive models, when variations in the data are simultaneously considered for all DMUs. By means of modified DEA models, in which the specific DMU under examination is excluded from the reference set, we are able to determine what perturbations of the data can be tolerated before efficient DMUs become inefficient. Our approach generalises the usual sensitivity analysis approach developed in which perturbations of the data are only applied to the test DMU while all the remaining DMUs remain fixed. In our framework data are allowed to vary simultaneously for all DMUs across different subsets of inputs and outputs. We study the relations of the infeasibility of modified DEA models employed and the robustness of DEA models. It is revealed that the infeasibility means stability. The empirical applications demonstrate that DEA efficiency classifications are robust with respect to possible data errors, particularly in the convex DEA case.

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