envelopment analysis (DEA) in operations research and economics is a non-parametric
method for estimating the production frontiers. Productive efficiency of
decision making units (DMUs) is measured by Data Envelopment Analysis. Although
DEA has a strong link to production theory in economics, this tool is used in operations
management for benchmarking, where there are a set of measures which is
selected to benchmark the performance of service operations and manufacturing. Data
envelopment analysis (DEA), which is sometimes known as frontier analysis, was
first put forward by Charnes , Cooper and Rhodes in the year1978. It is a
performance measurement technique which can be used to evaluate the relative efficiency
of decision-making units in organizations. Here a DMU is a distinct unit within
an organization that has the flexibility to make some of the important decisions
but not necessarily has complete freedom
with respect to some important decisions.
of such units to which DEA has been applied are: police stations, banks,
hospitals, tax offices, defense bases
(army, navy, air force), university departments and schools. Note here that one
advantage of DEA is that it can be applicable to non-profit making organizations.
Since the technique was first proposed , much empirical and theoritical work has already been done. Approaches
which are non-parametric have the benefit of not assuming a particular
functional form or shape for the frontier, however they do not provide a
general relationship (equation) relating to output and input.
is commonly used in evaluating the efficiency of a number of producers. Data
Envelopment Analysis (DEA) is a very powerful service management and
benchmarking technique to evaluate non – profit and public sector
organizations. DEA has since been proven to locate ways to improve servicewhich
has not been visible with other techniques. Yet there is anomaly surrounding
this developing methodology.
Data envelopment analysis (DEA) is a linear programming based technique
for measuring the relative performance of organisational units where the presence
of multiple outputs and inputs makes comparisons difficult to make. This
introduces the technique and uses an example to show how relative efficiencies
can be made to be determined and can be targeted for inefficient units set.