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Impact of input substitution and output transformation on data envelopment analysis decisions |
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| Authors: | Darold Barnum Jason Coupet John Gleason Abagail McWilliams Annaleena Parhankangas |
| Affiliation: | 1. Departments of Managerial Studies, University of Illinois at Chicago, Chicago, IL, USA;2. Information &3. Decision Sciences, University of Illinois at Chicago, Chicago, IL, USA;4. Pharmacy Systems, Outcomes &5. Policy, University of Illinois at Chicago, Chicago, IL, USA;6. Department of Public Administration, School of Public and International Affairs, North Carolina State University, Raleigh, NC, USA;7. Department of Business Intelligence &8. Analytics (Emeritus), College of Business Administration, Creighton University, Omaha, NE, USA;9. College of Business Administration, University of Illinois at Chicago, Chicago, IL, USA;10. Department of Managerial Studies, College of Business Administration, University of Illinois at Chicago, Chicago, IL, USA |
| Abstract: | Data envelopment analysis (DEA) can aid managerial decision-making because it offers an opportunity to measure organizational performance in a holistic manner, aggregating data from partial indicators into a single comprehensive measure. However, there are some methodological hazards associated with the use of DEA that are especially relevant to managerial decisions, but which have been largely ignored in the literature. Herein, we identify and show the impact of a ubiquitous methodological hazard in DEA modelling – the economic assumptions regarding input substitutions and output transformations. |
| Keywords: | Data envelopment analysis DEA efficiency product transformation factor substitution decision-making |