Chance-constrained cost efficiency in data envelopment analysis model with random inputs and outputs


Data envelopment analysis (DEA) is a well-known non-parametric technique primarily used to estimate radial efficiency under a set of mild assumptions regarding the production possibility set and the production function. The technical efficiency measure can be complemented with a consistent radial metrics for cost, revenue and profit efficiency in DEA, but only for the setting with known input and output prices. In many real applications of performance measurement, such as the evaluation of utilities, banks and supply chain operations, the input and/or output data are often stochastic and linked to exogenous random variables. It is known from standard results in stochastic programming that rankings of stochastic functions are biased if expected values are used for key parameters. In this paper, we propose economic efficiency measures for stochastic data with known input and output prices. We transform the stochastic economic efficiency models into a deterministic equivalent non-linear form that can be simplified to a deterministic programming with quadratic constraints. An application for a cost minimizing planning problem of a state government in the US is presented to illustrate the applicability of the proposed framework.

Publication DOI:
Divisions: College of Business and Social Sciences > Aston Business School > Operations & Information Management
Additional Information: © 2018 Springer Publishing. This is a post-peer-review, pre-copyedit version of an article published in Operational Research. The final authenticated version is available online at:
Uncontrolled Keywords: Data envelopment analysis Weight restrictions Random input–output Cost efficiency Quadratic programming
Publication ISSN: 1866-1505
Last Modified: 01 Apr 2024 07:23
Date Deposited: 23 Feb 2018 12:00
Full Text Link: http://link.spr ... 2351-018-0378-1
Related URLs: https://www.sco ... 408dc5da599873e (Scopus URL)
PURE Output Type: Article
Published Date: 2020-09
Published Online Date: 2018-02-20
Accepted Date: 2018-01-22
Authors: Shiraz, Rashed Khanjani
Hatami-marbini, Adel
Emrouznejad, Ali (ORCID Profile 0000-0001-8094-4244)
Fukuyama, Hirofumi



Version: Accepted Version

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