Theoretical perspectives of trade-off analysis using DEA

TY - JOUR

T1 - Theoretical perspectives of trade-off analysis using DEA

AU - Asmild, Mette

AU - Paradi, Joseph C.

AU - Reese, David N.

PY - 2006

Y1 - 2006

N2 - Because of the piecewise linear nature of the frontier in data envelopment analysis (DEA), estimated marginal rates of substitution are only valid for infinitesimal, or small finite, changes in one or more variables. Analysing the impacts of very small changes is not adequate for many situations, where the consequences of substantial changes in variables are of interest to for instance managers. This paper develops methods for evaluating larger, i.e. non-marginal, tradeoffs between variables in DEA. The methods are capable of handling both scalar and additive changes. Finally, the approaches for evaluating basic pairwise tradeoffs are generalised in order to enable assessment of the impact on one or more throughputs of the change in one or more of the other throughputs.

AB - Because of the piecewise linear nature of the frontier in data envelopment analysis (DEA), estimated marginal rates of substitution are only valid for infinitesimal, or small finite, changes in one or more variables. Analysing the impacts of very small changes is not adequate for many situations, where the consequences of substantial changes in variables are of interest to for instance managers. This paper develops methods for evaluating larger, i.e. non-marginal, tradeoffs between variables in DEA. The methods are capable of handling both scalar and additive changes. Finally, the approaches for evaluating basic pairwise tradeoffs are generalised in order to enable assessment of the impact on one or more throughputs of the change in one or more of the other throughputs.

KW - Data envelopment analysis (DEA)

KW - Marginal

KW - Non-marginal

KW - Rates of substitution

KW - Trade-off

U2 - 10.1016/j.omega.2004.11.002

DO - 10.1016/j.omega.2004.11.002

M3 - Journal article

AN - SCOPUS:27844604202

SN - 0305-0483

VL - 34

SP - 337

EP - 343

JO - Omega

JF - Omega

IS - 4

ER -