Identification of Pareto-efficient facets in Data Envelopment Analysis

In Data Envelopment Analysis (DEA), identification of the Pareto-efficient frontier of an empirical production possibility set is a prerequisite step toward determining rates of change of outputs with changes in inputs along its piecewise linear facets. These rates of change, which will be different on different facets, have important economic and managerial implications in trade-off analysis, forecasting and resource allocation. Accurate and complete identification of the component members of each facet remains an open question. Such identification is important in certain procedures for determining these rates of change. This paper develops three modifications to the pivoting criteria of the simplex algorithm, commonly used to solve DEA problems, as alternative strategies for more complete identifying facet members of the Pareto-optimal frontier common to several production possibility sets in DEA. Experimental results from implementing these strategies are presented.