A smoothed frontier for the 3-dimensional BCC-DEA model

A smoothed frontier for the 3-dimensional BCC-DEA model

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Article ID: iaor20043771
Country: Portugal
Volume: 24
Issue: 1
Start Page Number: 89
End Page Number: 107
Publication Date: Jun 2004
Journal: Investigao Operacional
Authors: , , ,
Abstract:

The multipliers DEA model has multiple optimal solutions in the extreme-efficient DMUs. This fact is a drawback in several applications, particularly when we need to know the tradeoffs and in Cross-Evaluation. We propose a solution using the geometric representation of DEA envelope model. In this representation the frontier is piece-wise linear, meaning that for the extreme-efficient DMUs there is no tangent plan to the DEA frontier, as these DMUs are the cusps of the faces. The solution consists in changing the original frontier by another with continuous partial derivatives in every point and being as close as possible to the original one. We obtained a smoothed frontier with similar properties to the original, but with tangent plans at all points. The multipliers are obtained from the tangent plans equations. We present the general case theoretical development, which makes use of a non-metric topology based on the generalisation of the arch length, whose minimisation leads to a non-exactly soluble variational problem. Approximate solutions are obtained by the Ritz variational method. We present the particular case of the three-dimensional DEA BCC model, applied to the evaluation of Brazilian airlines companies.

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