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RAM: A Range Adjusted Measure of Inefficiency for Use with Additive Models, and Relations to Other Models and Measures in DEA

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Abstract

Generalized Efficiency Measures (GEMS) for use in DEA are developed and analyzed in a context of differing models where they might be employed. The additive model of DEA is accorded a central role and developed in association with a new measure of efficiency referred to as RAM (Range Adjusted Measure). The need for separately treating input oriented and output oriented approaches to efficient measurement is eliminated because additive models effect their evaluations by maximizing distance from the efficient frontier (in ℓ1, or weighted ℓ1, measure) and thereby simultaneously maximize outputs and minimize inputs. Contacts with other models and approaches are maintained with theorems and accompanying proofs to ensure the validity of the thus identified relations. New criteria are supplied, both managerial and mathematical, for evaluating proposed measures. The concept of “approximating models” is used to further extend these possibilities. The focus of the paper is on the “physical” aspects of performance involved in “technical” and “mix” inefficiencies. However, an Appendix shows how “overall,” “allocative” and “technical” inefficiencies may be incorporated in additive models.

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Authors and Affiliations

  1. Graduate School of Business, The University of Texas at Austin, Austin, Texas, 78712-1174, USA

    William W. Cooper & Jesus T. Pastor

  2. Graduate School of Management, Korea Advanced Institute of Science & Technology, Kaist 207-43 Cheongryang, Dongdaemun, Seoul, 130-012, Korea

    Kyung Sam Park

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  1. William W. Cooper
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  2. Kyung Sam Park
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Cooper, W.W., Park, K.S. & Pastor, J.T. RAM: A Range Adjusted Measure of Inefficiency for Use with Additive Models, and Relations to Other Models and Measures in DEA. Journal of Productivity Analysis 11, 5–42 (1999). https://doi.org/10.1023/A:1007701304281

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