IME 634 Management Decision Analysis Raghu Nandan Sengupta

Data Envelopment Analysis (DEA) § Consider you have a system or also called a

Data Envelopment Analysis (DEA) (contd. . ) § Invariably there may be many such

Data Envelopment Analysis (DEA) (contd. . ) • IME 634 RNSengupta, IME Dept. ,

Data Envelopment Analysis (DEA) (contd. . ) § Let us also consider three (3)

Decreasing Return to Scale (DRTS) IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA

Decreasing Return to Scale (DRTS) (contd. . ) IME 634 RNSengupta, IME Dept. ,

Increasing Return to Scale (IRTS) IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA

Increasing Return to Scale (IRTS) (contd. . ) IME 634 RNSengupta, IME Dept. ,

Constant Return to Scale (CRTS) IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA

Variable Return to Scale (VRTS) IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA

• IME 634 O/P Oriented Optimization Models (for K DMUs) RNSengupta, IME Dept.

• O/P Oriented Optimization Models (for K DMUs) (contd. . ) IME 634

I/P Oriented Optimization Models (for K DMUs) • IME 634 RNSengupta, IME Dept. ,

I/P Oriented Optimization Models (for K DMUs) (contd. . ) • IME 634 RNSengupta,

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IME 634: Management Decision Analysis Raghu Nandan Sengupta Industrial & Management Department Indian Institute of Technology Kanpur IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA 1

Data Envelopment Analysis (DEA) § Consider you have a system or also called a decision making unit (DMU), which takes some inputs (I/Ps), processes them and produces some outputs (O/Ps) § Examples of systems or DMUs can be a machine, a factory, a hospital, an airport, an university, etc. IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA 2

Data Envelopment Analysis (DEA) (contd. . ) § Invariably there may be many such similar systems or DMUs which take as inputs the same types or set of I/Ps in different quantum, process them and produces the O/Ps, also in different quantum § In such cases we are required to find, what is the rate of processing of the I/Ps or O/Ps, or what is the efficiency of the systems, so that we can compare them amongst themselves and also find out, to what degree they are deficient when compared to the so called ideal system or a fully efficient system or an efficient DMU IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA 3

Data Envelopment Analysis (DEA) (contd. . ) • IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA 4

Data Envelopment Analysis (DEA) (contd. . ) § Let us also consider three (3) different concepts of production and returns, which are v. Increasing return to scale (IRTS) v. Decreasing return to scale (DRTS) v. Constant return to scale (CRTS) IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA 5

Decreasing Return to Scale (DRTS) IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA 6

Decreasing Return to Scale (DRTS) (contd. . ) IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA 7

Increasing Return to Scale (IRTS) IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA 8

Increasing Return to Scale (IRTS) (contd. . ) IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA 9

Constant Return to Scale (CRTS) IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA 10

Variable Return to Scale (VRTS) IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA 11

• IME 634 O/P Oriented Optimization Models (for K DMUs) RNSengupta, IME Dept. , IIT Kanpur, INDIA 12

• O/P Oriented Optimization Models (for K DMUs) (contd. . ) IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA 13

I/P Oriented Optimization Models (for K DMUs) • IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA 14

I/P Oriented Optimization Models (for K DMUs) (contd. . ) • IME 634 RNSengupta, IME Dept. , IIT Kanpur, INDIA 15