Error Reduction Method for Ranking Decision Making Units with Stochastic Data

Data Envelopment Analysis (DEA) is a non-parametric technique which is based on mathematical programming for evaluating the efficiency of a set of Decision Making Units (DMUs). Throughout applications, managers encounter with stochastic data and the necessity of having a method that is able to rank and evaluate the efficiency of DMUs has been under consideration. This paper addresses a ranking method while considering the occurrence of probability unpredicted states. In this method level of error which has been used to make the efficiency has the essence of probability. Within this ranking method, a DMU will have a higher rank, if at level of error which is less than that of the managers have determined, it still remains stochastically efficient. At the end,the numerical example is fabricated to illustrate the application of the model

Keywords:

Data envelopment analysis , Quadratic programming , Ranking , Stochastic programming