IMPROVING ENVELOPMENT IN DEA BY MEANS OF HYPERPLANES

In Data Envelopment Analysis, some of inputs or outputs are ignored in computing the efficiency of DMUs; therefore the efficiency measure will not be real. Thanassoulis et al (2012) have recently proposed an approach to envelope inefficient decision making units (DMUs) with zero or negligible input or output weights. Their method creates unobserved DMUs under the multiple input and output variable returns to scale environment, but any condition doesn’t guarantee unobserved DMUs be Pareto efficient, because of this some weak efficient frontiers of the production possibility set remain weak and the envelopment doesn’t improve in these parts. This research attempts to generate Pareto efficient unobserved DMUs by using efficient defining hyperplanes. The proposed method is illustrated with real data of gas companies in Iran.

Keywords:

Data Envelopment Analysis , Supporting hyperplane , Unobserved DMUs