IO Priorities

This enables the user to depart from classical DEA models so as to vary the priority given to the improvement of an input or alternatively an output in seeking Pareto efficiency. The software solves variants of the following basic DEA model:

Where xij is the ith input level at DMU j and yrj is the rth output level at DMU j. The unit being assessed is j0. The variables in the model are λj and θ. The wi and wr are user-specified weights or ‘priorities’ and they are what can be manipulated under IO Priorities.

The 'priorities' enable the user to vary the default settings for the importance given to the rise in output and reduction in input levels in moving to the efficient boundary of the unit being assessed, if not already there. In an input orientated model all inputs have by default equal importance (set notionally at 100) and all outputs have zero importance. In an output orientated model the reverse is the case and in a non-orientated model by default both inputs and outputs have equal weights of 100. You can alter these weights to express varying preferences over the importance of improving different input-output variables. (The wi or wr is set to zero for an exogenously fixed input or output respectively in the VRS case.)

The sum of the slacks si and sr is maximised after the optimal value of θ has been determined and specified within the above model.

As you can see from the illustration below, a sliding arrow is used to enable you to easily set the value of the weight wi or wr within the above model.

Note, however, that the DEA efficiency reported can no longer be seen as the radial distance from the efficient boundary once we move away from an orientated model in which all inputs or alternatively all outputs have the same importance. The target input-output levels to render a unit Pareto-efficient normally are the focus of the analysis when default priorities are altered. The efficiency reported is the weighted combination of the proportional changes in input-output levels which has no ready interpretation in terms of targets.

Ensure you then click on the

icon to save your project changes.