The Sensitivity analysis and sustainability radius of economic efficiency in Data Envelopment Analysis

In economics, a production function relates the outputs of a production process to the inputs of the production. Generally, the production function is not available due to the complexity of the production process, the changes in production technology. Therefore, we have to consider an approximation of the production function. Data Envelopment Analysis (DEA) is a non-parametric methodology for obtaining an approximation of the production function and assessing the relative efficiency of economic units. Sensitivity analysis and sustainability evaluation of Decision Making Units (DMUs) are as the most important concerns of Decision Makers (DM). This study considers the sustainability radius of economic performance of DMUs and then proposes some approaches combined with sensitivity analysis for determining the sustainability radius of cost efficiency, revenue efficiency and profit efficiency of units. The proposed approaches eliminate the unit under evaluation from the observed data and disturb the data of it, based on the sensitivity analysis, to determine the sustainability radius of cost efficiency, revenue efficiency and profit efficiency of decision making units. Potential application of our proposed methods is illustrated with a dataset consisting of ۲۱ medical centers in Taiwan.

Keywords:

Data Envelopment Analysis , Economic efficiency , Cost efficiency , Revenue efficiency , Profit efficiency , Sustainability radius