Sensitivity Analysis of an Efficient DMU in DEA Model with Variable Returns to Scale (VRS) |
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Authors: | Valter Boljunčić |
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Institution: | (1) Faculty of Economics and Tourism, University of Rijeka, Preradovićeva 1/1, 52100 Pula, Croatia |
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Abstract: | In this paper we consider the Variable Returns to Scale (VRS) Data Envelopment Analysis (DEA) model. In a DEA model each Decision
Making Unit (DMU) is classified either as efficient or inefficient. Changes in inputs or outputs of any DMU can alter its
classification, i.e. an efficient DMU can become inefficient and vice versa. The goal of this paper is to assess changes in
inputs and outputs of an extreme efficient DMU that will not alter its efficiency status, thus obtaining the region of efficiency
for that DMU. Namely, a DMU will remain efficient if and only if after applying changes this DMU stays in that region. The
representation of this region is done using an iterative procedure. In the first step an extended DEA model, whereby a DMU
under evaluation is excluded from the reference set, is used. In the iterative part of the procedure, by using the obtained
optimal simplex tableau we apply parametric programming, thus moving from one facet to the adjacent one. At the end of the
procedure we obtain the complete region of efficiency for a DMU under consideration. |
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Keywords: | DEA VRS Additive model Sensitivity analysis LP Extended DEA model Parametric programming |
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