A stochastic frontier model is considered – a linear regression model linking the firm activity measure (e.g., the production volume of an enterprise) and the resource inputs. This model is used to determine the efficiency of decision-making units (DMUs). A series of stochastic experiments is run to determine the model’s ability to rank the DMUs by efficiency – a Spearman rank correlation coefficient and the Harrell concordance index are calculated as a function of the variance of the two error components of the regression model: a normally distributed stochastic shock and an inefficiency index with half-normal or exponential distribution.
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Translated from Prikladnaya Matematika i Informatika, No. 71, 2022, pp. 81–94.
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Nikol’skii, I.M., Furmanov, K.K. Ranking Accuracy of the Efficiency Index in the Stochastic Frontier Model. Comput Math Model 33, 319–329 (2022). https://doi.org/10.1007/s10598-023-09575-4
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DOI: https://doi.org/10.1007/s10598-023-09575-4