Obtaining a Unique Solution for the Cross Efficiency by Using the Lexicographic method

Subject Areas : Data Envelopment Analysis

G. R. Jahanshahloo ¹ , R. Fallahnejad ²

1 - epartment of Mathematics, Science and Research Branch, Islamic Azad University, Tehran, Iran
2 - epartment of Mathematics, Khorram Abad Branch, Islamic Azad University, Khorram Abad, Iran

Received: 2010-07-30 Accepted : 2010-08-30 Published : 2010-09-01

Keywords: Data envelopment analysis, Ranking, Cross efficiency, Lexicographic Method,

Abstract :

Cross efficiency is a method with the idea of peer evaluation instead of self-evaluation, and is used for evaluation and ranking Decision Making Units (DMUs) in Data Envelopment Analysis (DEA). Unlike most existing DEA ranking models which can only rank a subset of DMUs, for example non-efficient or extreme efficient DMUs, cross efficiency can rank all DMUs, even non-extreme ones. However, since DEA weights are generally not unique, cross-efficiency which uses optimal weights corresponding to evaluation of DMUs may not be unique either. This deficiency renders the cross efficiency method useless. However, the secondary goals proposed to deal with this deficiency of cross efficiency have such drawbacks themselves as well. In this paper we present a new secondary goal for cross efficiency method based on the lexicographic method. The main advantage of the proposed method is that with the possibility of existence of alternative optimal weights at the end of the secondary goal problem, the performance and the rank of DMUs will be constant, while the previous secondary goal methods don't offer any suggestions to deal with their alternative optimal weights.

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