Cost Efficiency Evaluation via Data Envelopment Analysis Approach for Undesirable Outputs based on the Weak Disposability Axiom (Case Study: 56 Electricity Producing Thermal Power Plants in Iran)

Cost efficiency evaluation is a very important and applicable issue in Data Envelopment ‎Analysis (DEA). In this paper, the classical cost efficiency model in which all the input ‎prices are known and fixed for each decision making unit is developed via undesirable ‎outputs with the weak disposability axiom. The proposed model is a nonlinear model ‎under the variable returns to scale condition, which is linearized for the purposes of easy ‎solving. In order to simulate the proposed model and demonstrate its advantages and ‎application capabilities, 56 electricity producing thermal power plants were studied based ‎on data set that is presented in 2015. According to the simulation results based on the ‎present method, the combined cycle and steam power plants had the highest cost ‎efficiencies under the both assumed conditions, i.e., the constant returns to scale and the ‎variable returns to scale. Moreover, the average cost efficiencies of the power plants were ‎‎36% and 54% under the assumed conditions of constant returns to scale and variable ‎returns to scale, respectively.‎