Efficiency analysis to incorporate interval-scale data

0377-2217/$ see front matter 2010 Elsevier B.V. A doi:10.1016/j.ejor.2010.03.039 * Corresponding author. E-mail address: [email protected] (P.J. Korho 1 The term ‘‘radial” in the traditional DEA-literature reach the efficient frontier by proportionally increasi outputs or decreasing the values of the current inputs We develop an approach to efficiency analysis to enable us to incorporate interval-scale data in addition to ratio-scale data. Our approach introduces a measure of inefficiency and identifies efficient units as is done in Data Envelopment Analysis. The basic idea in our approach is to find the ‘‘best” hyperplane separating the units that are better and worse than each unit. ‘‘Best” is defined in such a way that the number of not-better units is maximal. The efficiency measure is defined as a proportion of not-better units to all units. The results are invariant under a strictly increasing linear re-scaling of any inputor output-variables. Thus zeroes or negative values do not cause problems for the analysis. The approach is used to analyze the data of the research evaluation exercise recently carried out at the University of Joensuu, Finland. 2010 Elsevier B.V. All rights reserved.