Data Envelopment Analysis

This book describes the method of data envelopment analysis that uses mathematical programming techniques to obtain measures of efficiency of individual forms from their observed input and output quantities. The method permits setting up realistic input-output targets for the firm''s managers. A firm is considered to be technically inefficient when it fails to yield the maximum quantity of output producible from the input bundle it uses. Measurement of technical efficiency is important for performance evaluation and provides an objective basis for differential rewards in the context of production.