Emrouznejad, Ali (2000) The assessment of dynamic efficiency of decision making units using data envelopment analysis. PhD thesis, University of Warwick.

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Abstract

The concept of a "production function" as means to measuring efficiency began
in 1928 with the seminal paper by Cobb and Douglas (1928). However, until the
1950s, production functions were largely used as a tool for studying the functional
distribution of income between capital and labour. Farrell's argument (1957) provides
an intellectual basis for redirecting attention from the production function specifically
to the deviation from that function as a measure of efficiency. He developed a
method so that we can measure efficiency in terms of distance to the "best DMU" on
the frontier isoquant.
Charnes, Cooper and Rhodes (1978) generalised Farrell's concept to multiple -
input multiple - output situations and reformulated it using mathematical programming
and thus derived an efficiency measurement known as Data Envelopment Analysis
(DEA). Therefore DEA is a linear programming based method for comparing
Decision Making Units (DMUs) such as schools, hospitals, etc. In the method
originally proposed by Charnes, Cooper and Rhodes (1978) the efficiency of a DMU
is defined as a ratio of the weighted sum of outputs to the weighted sum of inputs.
Thus in the original DEA approach the notion of time dimension has been ignored.
This thesis proposes a IDEA based method for assessing the comparative
efficiencies of DMUs operating production processes where input - output levels are
inter - temporally dependent. One cause of inter - temporal dependence between
input and output levels is stock input which influences output levels over many
production periods. Such DMUs cannot be assessed by traditional or 'static' DEA.
The method developed in the study overcomes the problem of inter - temporal input -
output dependence by using input - output 'paths' mapped out by operating DMUs
over time as the basis of assessing them.
The aim of this thesis is, therefore, firstly, to address that traditional or "static"
IDEA fails to capture the efficiency of DMUs with inter - temporal input - output
dependence. Secondly the thesis develops an approach for measuring efficiency
under inter - temporal input - output dependence by defining an inter - temporal
Production Possibility Set (PPS). The method developed uses path of input - output
levels associated with DMUs rather than input - output DMUs observed at one point
in time as static IDEA does. Using this PPS, an assessment framework is developed
which parallels that of static DEA.
The thesis develops mathematical programming models which use input -
output paths to measure efficiency, identify peers and target of performance of
DMUs.
The approach is illustrated using simulated and real data.

Item Type:	Thesis or Dissertation (PhD)
Subjects:	H Social Sciences > HB Economic Theory
Library of Congress Subject Headings (LCSH):	Production functions (Economic theory), Industrial efficiency -- Mathematical models, Associations, institutions, etc. -- Mathematical models, Associations, institutions, etc. -- Economic aspects
Official Date:	June 2000
Dates:	Date Event June 2000 Submitted
Institution:	University of Warwick
Theses Department:	Warwick Business School
Thesis Type:	PhD
Publication Status:	Unpublished
Supervisor(s)/Advisor:	Thanassoulis, Emmanuel
Sponsors:	Iran. Vizārat-i Farhang va Āmūzish-i ʻĀlī [Ministry of Culture and Higher Education]
Extent:	xii, 288 leaves
Language:	eng
URI:	http://wrap.warwick.ac.uk/id/eprint/4366

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