The closest strong efficient targets in the FDH technology: an enumeration method

This paper is concerned with the identification of the closest strong efficient target of a Decision Making Unit (DMU) in the Free Disposal Hull (FDH) technology in Data Envelopment Analysis (DEA). The paper uses the geometrical properties of the FDH Production Possibility Set (PPS) to design and test an enumeration algorithm to obtain the minimum distance from a DMU to the strong efficient frontier of the PPS, corresponding to each of the various returns to scale assumptions. The proposed method solves some simple optimization problems whose optimal solutions are obtained by calculating a limited number of ratios. Then, an attempt will be made to mitigate the problem of the lack of unit and translation invariance of the selected distances by considering weighted norms. Finally, the applicability of the presented method is illustrated by a numerical example using real data.