Mahta Yekkalam Tash: On value efficiency

Data Envelopment Analysis (DEA) is a linear programming method. It evaluates the efficiency of Decision Making Units (DMU)s with multiple inputs and outputs. It is a non-parametric method and estimates production frontier in economics and Operational Research.

This study is based on searching the Most Preferred Solution (MPS), that is, the combination of inputs and outputs of DMUs introduced by Decision Maker (DM) and is DEA efficient DMU. Since the value function is unknown, the countor of value function at MPS should be approximated. This approximation will be done by its tangent cone at MPS. It is possible to evaluate Value Efficiency (VE) scores for each DMU. In this study, the value efficiency is developed by introducing two refinement: (i) the upper and lower bound for VE is discussed; (ii) a more precise way of evaluating VE is proposed.