Measuring the overall performances of decision-making units: An application to burden-sharing amongst NATO member nations

Author
Hossein Azizi
Abstract
Data envelopment analysis (DEA) has proven to be very useful in evaluating relative efficiencies of decision-making units (DMUs) with multiple outputs and multiple inputs. The conventional form of data envelopment analysis evaluates performances of decision-making units only from the optimistic point of view. In other words, it chooses a set of the most favorable weights for each decision-making unit. There is another approach that measures the efficiency of a decision-making unit from the pessimistic point of view. This approach chooses a set of the most unfavorable weights for evaluation of each decision-making unit. In this paper, we propose to integrate both efficiencies in the form of an interval in order to measure the overall performance of a decision-making unit. The proposed Data Envelopment Analysis Models for evaluation of efficiencies are called bounded data envelopment analysis models. The proposed approach will be compared using a numerical example. Another example about assessment of burden-sharing among members of the North Atlantic Treaty Organization (NATO) will be presented to illustrate the advantages, simplicity, and utility of this approach in real-life situations.
Keywords
Data Envelopment Analysis
Interval efficiency
optimistic and pessimistic efficiencies
Bounded models
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Organizational Resources Management Researches
Volume 2, Issue 3
November 2012
Pages 89-117