Data envelopment analysis In operation research

Introduction to Data envelopment analysis:

Data envelopment analysis (DEA), infrequently called frontier analysis, was first put forward by Charnes, Cooper and Rhodes in 1978. It is a performance measurement method which, as we shall see, can be used for appraising the relative efficiency of decision-making units (DMU’s) in organizations. Here a DMU is a separate unit within an organization that has flexibility with respect to some of the choices it makes, but not necessarily absolute freedom with respect to these decisions.
Instances of such units to which DEA has been concerned are: banks, hospitals, tax offices, police stations, prisons, defence bases (army, navy and air force), schools and university departments. One advantage of DEA is that it can be implemented to non-profit making organisations.

Since the method was first proposed much theoretical and empirical work has been done. A lot of studies have been available dealing with applying DEA in real-world circumstances. Obviously there are many more unpublished studies, e.g. done inside by companies or by external mentors.
Here is an illustration of DEA by means of a small example. Further about DEA can be found here. Here that much of what you will see underneath is a graphical (pictorial) move toward to DEA. This is very helpful if you are attempting to give details DEA to those less technically qualified (for example many you might meet in the management world). There is an arithmetical approach to DEA that can be accepted however – this is illustrated later below.


Regard as a number of bank branches. Per branch we have a single output calculate (number of personal transactions completed) and an only input measure (number of staff).
The data we include is as follows:
Branch   Personal Number       staff

                    of  transactions
Croydon       125                          19
Dorking         44                            17
Redhill           80                           10
Reigate          23                             13

For instance, for the Dorking branch in one year, there were 44,000 transactions concerning to personal accounts and 16 staff was in employment.

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