MaxDEA Pro 6 Manual PDF

MaxDEA Pro 6.
Manual
CHENG Gang, QIAN Zhenhua

Email: MaxDEA@qq.com
http://www.MaxDEA.cn
Beijing Realworld Research and Consultation Company Ltd

Contents
1 Overview .................................................................................................1
Features of MaxDEA Pro .................................................................................. 1
DEA Models available in MaxDEA Pro ........................................................... 3
2 A Quick Guide ........................................................................................6
System Requirements ........................................................................................ 6
Prepare Data ....................................................................................................... 7
Data format .................................................................................................... 7
DMU Name .................................................................................................... 8
Panel Data ...................................................................................................... 8
Negative Data ..................................................................................................... 9
Import and Define Data................................................................................... 10
Run Model ........................................................................................................ 11
3 Envelopment DEA model ....................................................................12
Distance (method of measuring efficiency) .................................................... 12
Radial ........................................................................................................... 12
Maximum distance to frontier: SBM ........................................................... 12
Modified SBM ............................................................................................. 13
Minimum distance to weak efficient frontier ............................................... 13
Minimum distance to strong efficient frontier ............................................. 13
Directional Distance Function ..................................................................... 13
i
Hybrid distance: EBM ................................................................................. 17
Hybrid distance(Radial and SBM fields) ..................................................... 17
Cost, Revenue, Profit, and Revenue/Cost Ratio Models ............................. 17
Orientation........................................................................................................ 18
Returns to scale (RTS) ..................................................................................... 19
CCR model ....................................................................................................... 20
BCC model ........................................................................................................ 20
SBM model ....................................................................................................... 20
Modified SBM .................................................................................................. 21
FDH Model ....................................................................................................... 21
Advanced models ............................................................................................. 22
Super-efficiency model .................................................................................... 22
Range Directional model (RDM) .................................................................... 23
Window Model ................................................................................................. 23
Non-controllable Inputs/outputs Model ......................................................... 23
Measure Specific Model .................................................................................. 24
Restricted Projection Model ........................................................................... 24
Nondiscretionary Inputs/outputs Model ........................................................ 24
Bounded Inputs/outputs Model ...................................................................... 25
Undesirable Outputs Model ............................................................................ 25
Inseparable Good and Bad Outputs Model .................................................. 26
Weak Disposability Model............................................................................... 27
ii
Preference (weighted) Model .......................................................................... 28
Context–dependent model ............................................................................... 28
Cost, Revenue, Profit, and Revenue/Cost Ratio Model ................................ 28
Cluster Model ................................................................................................... 28
Data format for Cluster Model ..................................................................... 29
Self-benchmarking ....................................................................................... 30
Cross-benchmarking .................................................................................... 31
Downward-benchmarking............................................................................ 31
Upward-benchmarking ................................................................................ 32
Lower-adjacent-benchmarking .................................................................... 33
Upper-adjacent-benchmarking ..................................................................... 34
Window-benchmarking ................................................................................ 34
Variable-benchmark Model ............................................................................ 39
Customized Benchmarking ............................................................................. 39
Network DEA Model........................................................................................ 40
Dynamic Model ................................................................................................ 45
Results for Envelopment Model...................................................................... 48
Score ............................................................................................................ 48
Scale Efficiency ........................................................................................... 48
Allocative Efficiency ................................................................................... 48
Input Inefficiency ......................................................................................... 48
Input Radial Inefficiency (for Hybrid model) .............................................. 49
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Input Non-radial Inefficiency(for Hybrid model) ........................................ 49
Output Inefficiency ...................................................................................... 49
Output Radial Inefficiency(for Hybrid model) ............................................ 49
Output Non-radial Inefficiency(for Hybrid model) ..................................... 49
Benchmark (λ) ............................................................................................. 49
Times as a benchmark for another DMU ..................................................... 49
Σλ ................................................................................................................. 49
RTS Estimation ............................................................................................ 50
Original ........................................................................................................ 50
Proportionate Movement (Radial Movement) ............................................. 50
Slack Movement .......................................................................................... 50
Projection ..................................................................................................... 50
α, β and γ ...................................................................................................... 50
RHS Lower Bound and RHS Upper Bound ................................................ 50
Dual Prices and Sensitivity Analysis ........................................................... 50
4 Multiplier DEA Model .........................................................................52
Scale Elasticity .................................................................................................. 52
Cross Efficiency Model .................................................................................... 52
Assurance Region Model ................................................................................. 52
Trade-offs between Inputs and Outputs ........................................................ 52
Restricted Multiplier Model ............................................................................ 52
Parallel model ................................................................................................... 54
iv
Variable-benchmark Model ............................................................................ 54
Fixed-benchmark Model ................................................................................. 54
Minimum Efficiency Model ............................................................................ 55
Customized Benchmarking ............................................................................. 55
Results for Multiplier Model ........................................................................... 57
Weight .......................................................................................................... 57
Weighted Value ............................................................................................ 57
Coefficient Lower Bound and Coefficient Upper Bound ............................ 57
Sensitivity of Objective Function ................................................................ 57
Dual Solution ............................................................................................... 57
5 Productivity Analysis (Malmquist Model).........................................58
Adjacent Malmquist ........................................................................................ 59
Fixed Malmquist .............................................................................................. 59
Global Malmquist ............................................................................................ 59
Sequential Malmquist ...................................................................................... 59
Window-Malmquist (adjacent) ....................................................................... 59
Window-Malmquist (fixed) ............................................................................. 60
Cost Malmquist Model .................................................................................... 60
Revenue Malmquist Model ............................................................................. 60
Profit Malmquist Model .................................................................................. 61
Revenue Cost Ratio Malmquist Model .......................................................... 61
Results For Malmquist Models ....................................................................... 62
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Efficiency(t) ................................................................................................. 62
Efficiency(t-1) for adjacent reference .......................................................... 62
Efficiency(t+1) for adjacent reference ......................................................... 62
Efficiency_Fixed (t) for adjacent reference ................................................. 63
Efficiency_Global (t) for global reference ................................................... 63
Multiplicative measurement of productivity change ................................... 63
Additive measurement of productivity change ............................................ 66
7 Bootstrapping DEA Scores and Malmquist Indices .........................68
Method of Bootstrapping ................................................................................ 68
Method of Compute Confidence Intervals .................................................... 68
Bootstrapped Scores..................................................................................... 68
Original Score - Bootstrapped Bias ............................................................. 68
Bootstrapped Scores - 2* Mean of Bootstrapped Bias ................................ 68
Original Score / (1+ Bootstrapped Bias/Original Score) ............................. 68
Original Score / (1+ Bootstrapped Bias) ...................................................... 69
Smoothed Bootstrap......................................................................................... 69
Avoid Over-Smooth ..................................................................................... 69
Random Numbers for Panel Data .................................................................. 69
Number of replications .................................................................................... 69
Alpha for Confidence Interval ........................................................................ 69
Simplify Results................................................................................................ 69
Re-compute Confidence Intervals for Existing Bootstrap Results .............. 69
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Results from Bootstrapping DEA scores ........................................................ 69
Score(Original) ............................................................................................ 70
Bias .............................................................................................................. 70
Mean ............................................................................................................ 70
Median ......................................................................................................... 70
SD ................................................................................................................ 70
CI_LowerBound .......................................................................................... 70
CI_UpperBound ........................................................................................... 70
Results from Bootstrapping Malmquist indices ............................................ 71
1) RTS = CRS, VRS, NIRS, NDRS or GRS ................................................ 71
2) RTS = Scale Efficiency or Scale Effect (CRS Score / VRS Score) ......... 73
8 Options ..................................................................................................75
Result Decimals ................................................................................................ 75
Slack Computation........................................................................................... 75
Big M ................................................................................................................. 76
Epsilon for Modified Orientations ................................................................. 76
No optima .......................................................................................................... 76
Display Progress Bar ....................................................................................... 76
Weight Computation ........................................................................................ 76
Specify the value of epsilon ............................................................................. 77
Set timeout for solver ....................................................................................... 77
Export LP ......................................................................................................... 77
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9 Browse and Export Results .................................................................78
Browse results .............................................................................................. 78
Export results to Excel or other database ..................................................... 78
10 How to buy and register MaxDEA Pro ............................................79
11 Frequently asked questions （FAQ） .............................................81
12 Appendix .............................................................................................85
12.1 How to get the decomposition of the Malmquist Index in the literature
using MaxDEA Pro? ........................................................................................ 85
12.2 How to get the Luenberger productivity index and
Malmquist–Luenberger Index using MaxDEA Pro? .................................... 89
12.3 How to calculate MetaFrontier Malmquist and its components using
MaxDEA? ......................................................................................................... 91
12.4 An epsilon-based measure of efficiency in DEA - An alternative method
for the affinity index ........................................................................................ 92
12.5 Overcoming the infeasibility of the super-efficiency DEA model: A
model with generalized orientation ................................................................ 97
References .............................................................................................. 114
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1 Overview
Data envelopment analysis (DEA), originally developed by Charnes, Cooper, and

Rhodes (1978), is a linear programming methodology for evaluating the relative
technical efficiency for each member of a set of peer decision making units (DMUs)
with multiple inputs and multiple outputs. It has been widely used to measure
performance in many areas. A bibliography database (with abstracts) on DEA is
available at http://www.maxdea.cn/download/DEA_SCI.zip.
MaxDEA Pro is an easy-to-use but powerful and professional DEA software. It has the
most extensive range of the up-to-date DEA models.
Features of MaxDEA Pro

 Easy to use. It needn’t installation and has user-friendly interface. It is very easy
to prepare the dataset. You needn’t indicate what are the inputs and outputs by
field (variable) names or special arrangement of your data.
 Easy to save your DEA models and dataset. Everything needed is saved in a
single file. The software, your dataset and the settings for your DEA model are
all integrated into a single Access database file (.mdb), and it is the only file
needed for MaxDEA Pro, so it is very convenient to backup. After closing and
reopening MaxDEA Pro, your database and model settings are still there
unchanged.
 No limitation on the number of DMUs and most comprehensive DEA models.
 Multiple models can be run at the same time. You can rename or copy the
MaxDEA Pro file freely. Each copy of the file contains one DEA model with all
your data and settings saved in the file. You can open and run multiple files
simultaneously, taking full advantage of your multi-core CPU. It’s very useful
for time-consuming analysis such as bootstrapping. Note that you should open
all the files before you run the first of them. If you run one file before other files
open, it is possible that other files cannot open while the first file is running.
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 DEA linear programming can be exported to text files with 3 formats: matrix
format (*.txt), lp format (*.lp) and mps format (*.mps).
 Most important of all, MaxDEA Pro provides all the possible combinations of
up-to-date DEA models. To use a combination of multiple DEA models, just
choose all the relevant options. For example, Network-Malmquist model with
weakly disposable bad outputs can be achieved by choosing the settings for
Network, Undesirable outputs, Weak disposability and Malmquist, at the same
time.
2
DEA Models available in MaxDEA Pro
MaxDEA Pro has the most comprehensive DEA models and all their possible
combinations.
1) Distance to measure efficiency
 Radial
 Maximum distance to frontier：Slack based measure (SBM)
 Modified SBM
 Minimum distance to weak efficient frontier
 Minimum distance to strong efficient frontier
 Directional distance function,
 Range directional model (RDM)
 Hybrid: mixture of radial and SBM measure (EBM)
 Hybrid: mixture of radial and non-radial fields
 Cost /Revenue / Profit / Revenue-cost ratio
2) Orientation to measure efficiency
 Input-oriented
 Output-oriented
 Non-oriented
 Input-oriented (modified)
 Output-oriented (modified)
 Non-oriented (input-prioritized)
 Non-oriented (output-prioritized)
 Non-oriented (generalized priority)
3) RTS to measure efficiency
 Constance returns to scale (CRS)
 Variable returns to scale (VRS)
 Non-increasing returns to scale (NIRS)
 Non-decreasing returns to scale (NDRS)
3
 Generalized returns to scale (GRS)
4) FDH model
5) Window model
6) Malmquist model
 Adjacent Malmquist
 Fixed Malmquist
 Global Malmquist
 Sequential Malmquist
 Window-Malmquist (Adjacent)
 Window-Malmquist (Fixed)
7) Network model
8) Parallel model
9) Dynamic model
10) Context-dependent model
11) Super-efficiency model
12) Cross efficiency model.
13) Undesirable output model
14) Nondiscretionary input/output model (non-controllable model, measure
specific model)
15) Bounded input/output model
16) Preference (weighted) model
17) Restricted projection model
18) Weak disposability model
19) Restricted multiplier model (assurance region model, trade-offs between
inputs and outputs)
20) Cluster model
21) Customized reference ret model
 Variable-benchmark model
 Fixed-benchmark model
 Minimum efficiency model
4
22) Bootstrap
 Bootstrap of DEA Score
 Bootstrap of Malmquist Index
5
2 A Quick Guide
System Requirements
MaxDEA runs under Windows systems in any language, including:
Windows XP
Windows 2003
Windows Vista
Windows 7
Windows 8
MaxDEA is developed with VBA for Access, so Microsoft Access is required.
If the program file (MaxDEA.mdb) cannot open, it indicates that Microsoft Office
Access is not installed in your computer, and you must install MS Access 2003 or
higher version (professional edition or runtime edition) first.
Access 2013 Runtime can be downloaded free at Microsoft website:
http://www.microsoft.com/en-us/download/details.aspx?id=39358
（32-bit & 64-bit）
（32-bit & 64-bit）
（32-bit）
If your Office is 32-bit, please download the 32-bit MaxDEA; if your Office is
64-bit, please download the 64-bit MaxDEA at www.maxdea.cn.
6
Prepare Data
MaxDEA Pro can import data from Excel, Access, dBase and comma delimited
text files. Preparing your data in Excel is the most convenient way.
Data format
The first and only the first row must contain field (column, variable) names. The
field names can be anything you want, but there must not contain spaces left to
the column names. For example, column names such as “ Input1” are not
permitted.
Table 2-1(A) An example of correct data format
Company Capital Labor Product
A 4323 875 93608
B 2295 469 225559
C 6379 1286 327068
D 6644 1339 201354
E 1436 297 188926
F 6281 1266 413738
G 7459 1502 114022
Table 2-1(B) An example of wrong data format

DMU Input Output
Company Capital Labor Product
A 4323 875 93608
B 2295 469 225559
C 6379 1286 327068
D 6644 1339 201354
E 1436 297 188926
F 6281 1266 413738
G 7459 1502 114022
Note: Please confirm that there are no spaces between numbers in your data,
such as “1. 23” or “1 .23”. Such spaces often exist in the data copied from
PDF files.
7
DMU Name
DMU Name is the identifier for each DMU, so it must be unique. The name for
DMUs can be characters or numbers. The DEA results are sorted by DMU name,
so if you expect the results to be displayed by the original order of the dataset,
your dataset should be sorted by DMU name. If you use numbers as DMU name,
such as 1,2,…,100, MaxDEA will automatically format the numbers by adding
leading zeros, like 001, 002,…,100, so that the results are displayed in numerical
order. The number of leading zeros added depends on the length of the maximum
number.
Panel Data
For panel data, there must be an additional column indicating the time of the data.
DMU Name must be unique within each period. Panel data are prepared for
Malmquist, Window, and Dynamic models. If you try to run a cross-sectional
DEA model using panel data, there will be an error message indicating that the
DMU names are not unique. Panel data can be sorted by DMU name or by period,
but not necessary.
Panel data for Malmquist model and Window model are not necessary to be
balanced, i.e., missing values at some periods are permitted. But panel data for
Dynamic model must be balanced.
Table 2-2(A) An example of correct panel data format (balanced)

Period Company Capital Labor Product
1 A 4323 875 93608
1 B 2295 469 225559
1 C 6379 1286 327068
2 A 6644 1339 201354
2 B 1436 297 188926
2 C 6281 1266 413738
3 A 7459 1502 114022
3 B 4464 903 212444
3 C 4524 915 462677
8
Table 2-2(B) A second example of correct panel data format (balanced)
1 A 4323 875 93608
2 B 1436 297 188926
1 B 2295 469 225559
3 A 7459 1502 114022
3 B 4464 903 212444
1 C 6379 1286 327068
2 A 6644 1339 201354
2 C 6281 1266 413738
3 C 4524 915 462677
Table 2-2(C) An example of correct panel data format (unbalanced)

1 A 4323 875 93608
1 B 2295 469 225559
1 C 6379 1286 327068
2 A 6644 1339 201354
2 B 1436 297 188926
3 A 7459 1502 114022
3 B 4464 903 212444
3 C 4524 915 462677
The period field must be integer numbers, such as

1, 2, 3……
2001, 2002, 2003……
But they needn’t to be continuous. The following time series are permitted:
1, 2, 5, 8……
2001, 2005, 2009……
200101, 200102, 200302……
Negative Data
MaxDEA Pro permits negative values in inputs or outputs. The default method of
dealing with negative values is the variant radial measure (VRM) proposed by
Cheng, Zervopoulos, and Qian (2013). This method of dealing with negative
9
values in the VRM is also applied to other types of distances, such as the
non-radial (SBM) model.
Import and Define Data
After data is imported, the “Data Define” window will open automatically.
Defining data is to tell MaxDEA Pro which column is the DMU name, which
columns are inputs, and which columns are outputs. At least the fields for DMU
Name, Inputs and Outputs must be defined.
Missing values are not permitted in MaxDEA. If “DMU Name” has missing
values, there will be an error message “There is at least one DMU whose ‘DMU
Name’ is empty” or “Invalid use of Null”. If other fields (such as Input, Outputs,
Period and Cluster) have missing values, there will be an error message “... must
be numeric” or “... must be integer”.
Table 2-3 Missing values not permitted
DMU Input1 Input2 Output
A 4323 875 93608
B 2295 469 225559
C 6379 327068
D 6644 1339 201354
1436 297 188926
F 6281 1266 413738
G 7459 1502 114022
If you want to eliminate some inputs or outputs from the model, just deactivate
10
them. Only those active inputs/outputs will be included in your DEA model.
The imported data and their definitions are permanently saved, so after MaxDEA
Pro is closed, they will not be lost.
Run Model
There are two types of DEA models. One is called multiplier model, i.e., the
primal model, and the other is called envelopment model, i.e., the dual model.
The menu “Run Envelopment Model” is for envelopment models, “Run
Multiplier Model” is for multiplier models, and “Express to Basic Models” is an
express way to basic models (CCR and BCC), which is easy to use for new DEA
leaners.
The settings (options) for the DEA model are permanently saved, so after
MaxDEA Pro is closed, they will not be lost. If you want to save a backup of your
DEA model, just copy the “MaxDEA X.mdb” file and rename it as you want, such
as CCR.mdb, BCC.mdb.
11
3 Envelopment DEA model
Distance (method of measuring efficiency)
Including radial measure, non-radial measure, hybrid measure and financial measure
Radial
It measures the necessary proportional improvements of relevant factors (inputs /
outputs) for the evaluated DMU to reach the frontier.
Ref. to (Charnes, Cooper, & Rhodes, 1978; Banker, Charnes, & Cooper, 1984)
for CCR model and BCC model.
Maximum distance to frontier: SBM
The SBM model maximizes the average improvements of relevant factors (inputs
/ outputs) for the evaluate DMU to reach the frontier(Tone, 2001 ). The target
(projected point) determined by this method is a strong efficient point on the
frontier which is the farthest to the evaluated DMU. This method seems
unreasonable in that for an inefficient unit much more efforts may be needed to
reach the much farther target.
12
Modified SBM
A modified SBM model that can deal with negative data (Sharp, Meng, & Liu,
2007).
Minimum distance to weak efficient frontier
A closer target means less effort for an inefficient unit to reach the efficient frontier.
The minimum distance to weak efficient frontier finds a closest target located on
the weak efficient frontier.
Ref. to (Charnes, Roussea, & Semple, 1996; Briec, 1999)
Minimum distance to strong efficient frontier
The minimum distance to strong efficient frontier determines a closest target
located on the strong efficient frontier.
Ref. to (Aparicio, Ruiz, & Sirvent, 2007; Jahanshahloo, Vakili, & Zarepisheh,
2012)
Directional Distance Function
Directional distance function is a generalized form of radial model (Chambers,
Chung, & Färe, 1996; Chung, Färe, & Grosskopf, 1997). MaxDEA Pro provides
a further generalized form of the directional distance function. Here, α, β and γ
are not necessarily have same values, i.e. the proportion of input decrease is not
necessarily equal to that of output increase, and good output increase is not
13
necessary equal to bad output decrease. But, you can set α＝β＝γ.
The directional distance function model in MaxDEA Pro is expressed as
For DMU0
m
1  m1  wi g xio / xio
i 1
Efficiency score = min sd su
1  od 1
sd  wd  g ydo / ydo  ou
d 1
1
su w  g
u 1
u yuo / yuo
s.t. X   g x  xo
Y d    g dy  yod
Y u   g uy  you
u
0
Note that g y .
If the bad outputs are set weak disposable, the directional distance function model
need combine with the “Weak disposability” model
Y u    g uy  you
.
m: the number of inputs;
sd: the number of desirable (good) outputs
su: the number of undesirable (bad) outputs;
wi: user-defined weight of inputs;
wd: user-defined weight of desirable (good) outputs;
wu: user-defined weight of undesirable (bad) outputs;
x0 and y0: inputs and outputs of the evaluated DMU0;
gx and gy: user-defined direction vector for inputs and outputs;
od: user-defined overall weight of desirable (good) outputs;
ou: user-defined overall weight of undesirable (bad) outputs
14
m sd su
 wi  m,
i 1
 wd  sd ,
d 1
w
u 1
u  su
;
od + ou = 1.
In MaxDEA, the user can set the weights freely, for example, suppose there are 2
inputs and 2 outputs in the model, you can set weight for input1 = 1, weight for
input1 = 2, weight for output1 = 1, weight for output2 = 2, od =1, ou=1, and
MaxDEA will calculate the weights automatically.
This method to compute the efficiency score is defined by the authors of
MaxDEA Pro, with the following features:
1) The efficiency scores computed with this method are independent of the
length of the direction vector, although the values of α and β are dependent of the
length of the direction vector. For example, the computed efficiency scores are the
same if the direction vector (1, 1, 1, 1) or (2, 2, 2, 2) is used.
2) It keeps consistent with the measure used in radial model. If the directional
distance function model defined is equivalent to radial model, i.e., using x0 and y0
as the direction vector, the efficiency scores are the same.
3) The inputs and outputs can be attached with user-defined weights to indicate
their relative importance.
4) Overall weights of good outputs and bad outputs can be defined.
If you want to compute the efficiency scores using your own formula, your can
do it using the values of α, β and γ provided in the results.
There are six types of direction vectors for the directional distance function in
MaxDEA.
15
1) The values of the evaluated DMU, i.e., using x0 and y0 as the direction
vector;
2) The mean of all DMUs;
3) Vector (1, 1, 1…);
4) Gap between the evaluated value and best value, RDM (Portela, Thanassoulis,
& Simpson, 2004)
5) A self-defined vector same to all DMUs;
6) Self-defined vectors different to different DMUs.
The directional distance function model will be equivalent to the radial model with
the first type of direction vector, i.e. gx = x0, and gy = y0.
Note: Importance differences between MaxDEA Pro 5 and 6
In MaxDEA Pro 5, the users cannot assign negative values to the direction vector.
The values of the direction vector for bad outputs will be changed into negative
values automatically.
To make the direction vector more flexible, in MaxDEA Pro 6, the users are
permitted to assign both positive and negative values to the direction vector. But,
the users need to note that
With the non-user-defined direction vector types, i.e.,
1) Value of the evaluted DMU,
2) Mean of All DMUs,
16
3) Vector (1, 1, ……, 1),
4) Gap between the evaluated value and best value (RDM: Portelal et al,
2004), and
7) Direction Vector Scanning,
MaxDEA Pro 6 will automatically change positive values into negative values for
bad outputs, just as MaxDEA Pro 5 does.
With the user-defined direction vector types, i.e.,
5) Customized (same for all DMUs), and
6) Customized (DMU specific),
MaxDEA Pro 6 will use the user-defined (positive or negative) direction vector
values for bad outputs, which means that if the user defines positive values for
bad outputs, MaxDEA Pro 6 will not change them into negative values.
See Weak Disposability Model
Hybrid distance: EBM
EBM is a hybrid distance prosed by Tone and Tsutsui (2010b).
See 12.4 An epsilon-based measure of efficiency in DEA - An alternative method
for the affinity index.
Hybrid distance(Radial and SBM fields)
This is another type of hybrid model. It is a mixture of radial model and Non-radial
model, and it is a generalized form of radial and non-radial models(Cooper,
Seiford, & Tone, 2007). If Hybrid model is selected, you should define the
distances of inputs/outputs. Click the “Define” button right to the Hybrid check
box, the distance definition form will open.
If all the inputs/outputs are set to be radial in Hybrid model, it is equivalent to
radial model, and if all set to be non-radial, it is equivalent to SBM model.
Cost, Revenue, Profit, and Revenue/Cost Ratio Models
These models deal with financing aspects of DEA models in the case that prices of
inputs/outputs are known. It is related to the topic of allocative efficiency(Cooper,
Seiford, & Tone, 2007).
There are two types models, and MaxDEA names them as “Type I “and “Type II”
17
respectively. The difference between type I and type II is that type I models use the
original inputs/outputs values in constraints, while type II models use cost/revenue
values of inputs/outputs in constraints. (Type I is traditional and commonly used.)
To run the above models, price information must be set first using the “Define”
button on the right side. Cost model needs input prices, Revenue model needs
output prices, and Profit and Revenue/Cost Ratio models need both input and
output prices. The price fields must be kept “Not define” at the stage of “Define
Data”.
Note that efficiency score of profit model might be negative.
Orientation
Traditional orientations include

1) input-orientation,
2) output-orientation and
3) non-orientation.
MaxDEA Pro provides five new orientations:
4) input-orientation(modified),
5) output-orientation(modified),
6) non-orientation (input-prioritized),
7) non-orientation (output-prioritized),
8) non-orientation (generalized priority).
The significance of the new orientations is that the modified input-oriented and
18
modified output-oriented super-efficiency models overcome the infeasibility
problem in the traditional super-efficiency models.
See 12.5 Overcoming the infeasibility of the super-efficiency DEA model: A
model with generalized orientation.
Returns to scale (RTS)
Five types of RTS (returns to scale) are available with MaxDEA: constant(CRS),
variable(VRS), non-increasing(NIRS), non-decreasing(NDRS) and
generalized(GRS). If GRS is selected, you should also set the lower bound (L) and
upper bound (U) of Σλ. GRS is a generalized form of the other four types of RTS,
with the following relationship (Cooper, Seiford, & Tone, 2007):
Table 3-1 Relationship between GRS and other RTS
GRS
L U
CRS 0 
VRS 1 1
NIRS 0 1
NDRS 1 
The option “Scale Efficiency or Scale Effect (CRS Score / VRS Score)” is a special
case in which both CRS and VRS models will be solved, and the scale efficiency or
scale effect will be computed.
In Radial model, Scale Efficiency = CRS efficiency / VRS efficiency.
19
In non-radial models, Scale Effect = CRS efficiency / VRS efficiency.
RTS Estimation is also provided with this option.
For Malmquist model, the relationship between scale factors are as follows
 Scale Effect on Malmquist Index = Malmquist Index (CRS) / Malmquist
Index (VRS)
 Scale Effect on Efficiency Change = Efficiency Change (CRS) / Efficiency
Change (VRS)
In Radial model, Scale Effect on Efficiency Change is “Scale Efficiency
Change”.
 Scale Effect on Technological Change = Technological Change (CRS) /
Technological Change (VRS)
 Scale Effect on Malmquist Index = Scale Effect on Efficiency Change *
Scale Effect on Technological Change
Note that when “Scale Efficiency or Scale Effect (CRS Score / VRS Score)” is selected,
the result window only reports the scale efficiency scores or scale effect scores, but all
the detailed results under CRS and VRS can be obtained through the Menu “Tools –
Browse Results”.
CCR model
See Distance-Radial
BCC model
See Distance-Radial
SBM model
See Distance- Maximum distance to frontier: SBM
20
Modified SBM
See Distance-Modified SBM
FDH Model
The purpose of Free Disposal Hull (FDH) model is to ensure that efficiency
evaluation is based on only actually observed performances. The input-oriented
FDH model can be expressed using the following mixed integer LP,
min 
st  x0  X   s   0
Y   y0  s   0
s , s  0
21
e  1,  {0,1}
Note that the FDH model is located under “Returns to scale (RTS)”.
Ref. to (Deprins, Simar, & Tulkens, 1984; Tulkens, 1993)
Advanced models
Super-efficiency model
The difference between Super-efficiency model and standard efficiency model is
that in super models the DMU0 (the DMU evaluated) is eliminated from the
reference set (indicated by j≠0 in the LP).
Ref. to (Andersen & Petersen, 1993; Tone, 2002).
The Super-efficiency score can be greater than 1. In some cases, the LP for some
DMUs will be infeasible(Seiford & Zhu, 1999). In such cases, you can decide
whether the program returns 1 as the score through the option “No optima”.
22
Range Directional model (RDM)
A type of directional distance function proposed by Portela, Thanassoulis, and

Simpson (2004)
See Distance- Directional Distance Function
Window Model
The window model deals with panel data. Window width must be set for window
models.
Panel data for Malmquist model and Window model are not necessary to be
balnced, i.e., missing values at some periods are permitted.
If you want to get the DEA results for each year independently, you should set
window width to 1. It is equivalent to dividing the panel data into many datasets
(each dataset contains one year’s data) and analyzing each dataset one by one.
Non-controllable Inputs/outputs Model

See Nondiscretionary Inputs/outputs Model
23
Measure Specific Model
See Nondiscretionary Inputs/outputs Model
Restricted Projection Model

The restricted projection model is to add constraints on the ratios of input or output
projections (targets). The constraints are similar to the restricted multiplier model
(type I).
See Restricted Multiplier Model
Nondiscretionary Inputs/outputs Model

MaxDEA Pro provides a generalized nondiscretionary inputs/outputs models. And
the nondiscretionary model is actually a special case of a more generalized model -
bounded model (see the next part), so we just provide the LPs for bounded models
To run the nondiscretionary model, you should first set the discretion status of
inputs/outputs (“Full Discretion” means complete control, and “Non- or
Part-discretion” means limited control), and set the discretion degree for
nondiscretionary inputs/outputs. To do so, just click the “Define” button on the
right side. The format of discretion degree is percent.
Let’s talk about some special cases of nondiscretionary models.
1) The first special case is the nondiscretionary radial model with the discretion
degrees of all nondiscretionary inputs/outputs being zero. Such a case is also called
“non-controllable” radial model (Cooper, Seiford, & Tone, 2007).
2) The second special case is the nondiscretionary radial model with the discretion
degrees of all nondiscretionary inputs/outputs being 100%. Such a case is also
called “non-discretionary” radial model (Cooper, Seiford, & Tone, 2007), or
“measure specific” model (Zhu, 2009).
Please note that setting the discretion degrees of nondiscretionary inputs/outputs to
be 100% is not equivalent to setting the inputs/outputs to be “full-discretion” in
radial models, which is a little puzzling.
3) The third special case is the nondiscretionary SBM model with the discretion
degrees of all nondiscretionary inputs/outputs being zero. Such a case is also called
24
“non-controllable” SBM model (Cooper, Seiford, & Tone, 2007).
4) The last special case is the nondiscretionary SBM model with the discretion degrees
of all nondiscretionary inputs/outputs being 100%. Such a case is equivalent to a
normal model. In other words, setting the discretion degrees of nondiscretionary
inputs/outputs to be 100% is equivalent to setting the inputs/outputs to be “Full
Discretion” in SBM models.
If all the inputs/outputs are set to be “Full Discretion”, it is equivalent to the normal
model.
Bounded Inputs/outputs Model

To run a bounded model, you should first set the lower and upper bounds of the
bounded inputs/outputs, by the “define” button on the right side. The fields
indicating lower and upper bounds of inputs/outputs must be kept “Not define” at
the stage of “Define Data”. Lower bound must be less than or equal to the original
value, and upper bound must be greater than or equal to the original value.
If all the inputs/outputs are set to be “Full Discretion”, it is equivalent to the normal
model.
The nondiscretionary model is equivalent to the bounded model by setting the
lower and upper bounds as follows,
Lower bound = original value × (1－discretion degree )
Upper bound = original value /(1－discretion degree )
Undesirable Outputs Model

Undesirable model deals with the circumstances that bad outputs exit, by setting
the improvements of bad outputs in an opposite direction to the good outputs,
which means that more good outputs and less bad outputs are desired.
In MaxDEA Pro, you can develop DEA models with undesirable outputs using
any types of distances, such as radial, directional distance function, SBM and
hybrid model.
The radial measure with undesirable outputs is based on the directional distance
function (Chung, Färe, & Grosskopf, 1997), and can be seen as a special case of
25
directional distance function. The radial measure with undesirable outputs is
expressed as:
1
min  
wg   wb
1
wg  wb
st (1   ) x0  X   s   0
Y g   (1   ) y 0g  s g   0
Y b   (1   ) y b0  s b   0
g indicates good outputs, b indicates bad outputs, wg indicates weight of good

outputs, and wb indicates weight of bad outputs.
The β is omitted in the input-oriented model, and the α is omitted in the
output-oriented model.
If the bad outputs are treated as weak disposability, i.e.,
Y b   (1   ) y b0  0
，
the weak disposability model should be applied at the same time.
The SBM model with undesirable outputs is expressed as
m
1 1
m s 
i / xio
min   i 1
s
1  1s  sr / yro
r 1
st x0  X   s   0
Y g   y 0g  s g   0
Y b   y b0  s b   0
, s , s  0
Ref. to Cooper, Seiford, and Tone (2007).

See Weak Disposability Model
Inseparable Good and Bad Outputs Model
Inseparable outputs model deals with the situation that certain bad outputs are
26
inseparable from the corresponding good outputs (and certain inputs). Reducing
bad outputs is inevitably accompanied by reduction in good outputs.
Refer to Cooper, Seiford, and Tone (2007) for details about this model. There are
two types of inseparable models in this book, one is names as “SBM-NS”, and
the other is named as “NS-Overall”.
Please note that MaxDEA provides a more flexible inseparable model, you
should make the options in MaxDEA according to the linear programs in the
literature. The relevant options include orientation, weak disposability,
discretion, and whether
 Total amount of good outputs remains unchanged;
 Slacks of inseparable inputs are treated as inefficiency; and
 Slacks of inseparable bad outputs are treated as inefficiency.
Note that in MaxDEA the increasing upper bound for outputs is calculated with
the following formula
Upper bound = original value /(1－discretion degree ).
For example, if the discretion degree is set to be 20%, the actual percentage of
increasing will be 1 / (1 – 20%) – 100% = 25%. If you want to set the upper
bound of percentage of increasing to be 20%, the discretion degree should be 1 –
1 / (1 + 20%) = 16.6667%.
Weak Disposability Model

The weak disposability model restricts the slacks of input/outputs with weak
disposability to being zero:
st  x0s  X s   s s   0
 x0w  X w  0
Y s    y 0s  s s   0
Y w    y 0w  0
s indicates strong disposability and w indicates weak disposability.

Click the button “Define” on the right side to set inputs/outputs with weak
27
disposability.
Note: Weak Disposability is not applicable in non-radial (SBM) model.
Preference (weighted) Model

Weights can be assigned to inputs and outputs in SBM models according to their
relative importance as follows:
m
1  m1  wi si / xio
min   i 1
s
1  1s  wr sr / yro
r 1
m
w
i 1
i m
s
w
r 1
r s
Click the button “Define” on the right side to set weights.

The user can set the weights freely, for example, suppose there are 2 inputs and 2
outputs in the model, you can set
weight for input1 = 1,
weight for input1 = 2,
weight for output1 = 1,
weight for output2 = 2,
and MaxDEA will calculate the corresponding wi and wr automatically.
If you set the weights of all inputs/outputs to be 1, it is equivalent to the normal
model.
Context–dependent model
Ref. to Seiford and Zhu (2003)
Cost, Revenue, Profit, and Revenue/Cost Ratio Model

See Distance
Cluster Model
Cluster Model deals with the situation that the DMUs are categorized according to
their characteristics. There are 7 types of cluster models according to the relationship
between the clusters evaluated and the clusters as benchmarks.
28
Data format for Cluster Model
For cluster data, there must be an additional column indicating the clusters. Each
DMU belongs to only one cluster, and a DMU should not belong to different
clusters.
The following are examples of cluster data:
Table 3-2(A) Example data with clusters
DMU Cluster Input1 Input2 Output1 Output2
A 1 4323 875 93608 187196
B 1 2295 469 225559 451099
C 1 6379 1286 327068 654116
D 1 6644 1339 201354 402688
E 1 1436 297 188926 377833
F 1 6281 1266 413738 827456
G 2 7459 1502 114022 228024
H 2 4464 903 212444 424867
I 2 4524 915 462677 925334
Cluster data needn’t be balanced. The number of DMUs in each cluster can be
different.
Table 3-2(B) Example panel data with clusters
Period DMU Cluster Input1 Input2 Output1 Output2
1 A 1 4323 875 93608 187196
1 B 1 6644 1339 201354 402688
1 C 1 7459 1502 114022 228024
1 D 1 2295 469 225559 451099
1 E 1 1436 297 188926 377833
1 F 1 4464 903 212444 424867
1 G 2 6379 1286 327068 654116
1 H 2 6281 1266 413738 827456
1 I 2 4524 915 462677 925334
2 A 1 4341 944 93656 187279
2 B 1 6689 1374 201442 402767
2 C 1 7559 1511 114107 228101
2 D 1 2362 530 225604 451107
2 E 1 1513 381 188937 377886
2 F 1 4544 937 212446 424869
2 G 2 6406 1361 327102 654188
29
2 H 2 6369 1327 413797 827479
2 I 2 4563 942 462739 925393
Note: For panel data, the same DMU in different periods must belong to the
same cluster. For example, DMU A belongs to cluster 1 in period 1, and it must
belong to cluster 1 in period 2 and other periods.
The cluster field must be integer numbers, such as
1, 2, 3……
But they needn’t to be continuous. The following time series are permitted:
1, 2, 5, 8……
2001, 2005, 2009……
200101, 200102, 200302……
Self-benchmarking
In self-benchmarking model, each DMU is evaluated within the cluster it
belongs to. In effect it is a batch mode of evaluating the DMUs many times,
analyzing one cluster each time.
For example, if all the DMUs are categorized into 3 clusters, the results of
self-benchmarking model are the same as the following models. Firstly run the
model using the data of cluster 1 only, secondly cluster 2 only, and lastly cluster
3 only.
Self-benchmarking
Cluster Evaluated Cluster as Benchmark
Cluster 3 Cluster 3
Cluster 2 Cluster 2
Cluster 1 Cluster 1
30
Cross-benchmarking
In cross-benchmarking model, each DMU is evaluated successively with every
cluster as the reference set separately.
For example, if all the DMUs are categorized into 3 clusters,
1) Firstly all DMUs are evaluated using the DMUs in cluster 1 as reference set,
2) Secondly all DMUs are evaluated using the DMUs in cluster 2 as reference
set, and
3) Lastly all DMUs are evaluated using the DMUs in cluster 3 as reference set.
Cross-benchmarking
Cluster 3 Cluster 3
Cluster 2 Cluster 2
Cluster 1 Cluster 1
Downward-benchmarking
In downward-benchmarking, the DMUs in a cluster are evaluated with the
DMUs in its own cluster and those in the cluster with a lower cluster number
(cluster ID) as the reference set.
For example, if all the DMUs are categorized into 3 clusters: clusters 1, 2 and 3,
1) the DMUs in cluster 1 are evaluated with the DMUs in cluster 1 only as the
reference set;
2) the DMUs in cluster 2 are evaluated with the DMUs in cluster 1 and cluster 2
as the reference set; and
3) the DMUs in cluster 3 are evaluated with the DMUs in cluster 1, cluster 2,
and cluster 3 (all the DMUs) as the reference set.
31
Downward -benchmarking
Cluster 3 Cluster 3
Cluster 2 Cluster 2
Cluster 1 Cluster 1
Upward-benchmarking
Contrary to downward-benchmarking, in upward-benchmarking, the DMUs in a
cluster are evaluated with the DMUs in its own cluster and those in the cluster
with a upper cluster number (cluster ID) as the reference set.
1) the DMUs in cluster 1 are evaluated with the DMUs in cluster 1, cluster 2,
and cluster 3 (all the DMUs) as the reference set;
as the reference set; and
reference set.
32
Upward-benchmarking
Cluster 3 Cluster 3
Cluster 2 Cluster 2
Cluster 1 Cluster 1
Lower-adjacent-benchmarking
In lower-adjacent-benchmarking, the DMUs in a cluster are evaluated with the
DMUs in the cluster with a lower cluster number (cluster ID) as the reference
set.
1) the DMUs in cluster 1 are not evaluated;
2) the DMUs in cluster 2 are evaluated with the DMUs in cluster 1 as the
reference set; and
3) the DMUs in cluster 3 are evaluated with the DMUs in and cluster 2 as the
reference set.
Downward -benchmarking
Cluster 3 Cluster 3
Cluster 2 Cluster 2
Cluster 1 Cluster 1
33
Upper-adjacent-benchmarking
Contrary to lower-adjacent-benchmarking, in upper-adjacent-benchmarking, the
DMUs in a cluster are evaluated with the DMUs in the cluster with a upper
cluster number (cluster ID) as the reference set.
reference set;
reference set; and
3) the DMUs in cluster 3 are not evaluated.
Upward-benchmarking
Cluster 3 Cluster 3
Cluster 2 Cluster 2
Cluster 1 Cluster 1
Window-benchmarking
In window-benchmarking, the DMUs in a cluster are evaluated with the DMUs
in a cluster-window including its own cluster as the reference set. By default
(offset =0), the cluster-window is composed of its own cluster and a number of
adjacent clusters. The number of the adjacent clusters included in the window is
width – 1.
Suppose all the DMUs are categorized into 5 clusters: clusters 1, 2, 3, 4 and 5.
If window width = 2, offset = 0,
reference set, and its referred window is not full width;
as the reference set;
34
as the reference set.
Downward –benchmarking
Width = 2, Offset = 0
Cluster 5 Cluster 5
Cluster 4 Cluster 4
Cluster 3 Cluster 3
Cluster 2 Cluster 2
Cluster 1 Cluster 1

reference set, and its referred window is not full width.
35
Cluster 5 Cluster 5
Cluster 4 Cluster 4
Cluster 3 Cluster 3
Cluster 2 Cluster 2
Cluster 1 Cluster 1

reference set, and its referred window is not full width;
as the reference set, and its referred window is not full width;
3) the DMUs in cluster 3 are evaluated with the DMUs in cluster 1, cluster 2
and cluster 3 as the reference set;
and cluster 5 as the reference set.
36
Cluster 5 Cluster 5
Cluster 4 Cluster 4
Cluster 3 Cluster 3
Cluster 2 Cluster 2
Cluster 1 Cluster 1

as the reference set, and its referred window is not full width.
37
Cluster 5 Cluster 5
Cluster 4 Cluster 4
Cluster 3 Cluster 3
Cluster 2 Cluster 2
Cluster 1 Cluster 1

reference set, and its referred window is not full width.
38
Cluster 5 Cluster 5
Cluster 4 Cluster 4
Cluster 3 Cluster 3
Cluster 2 Cluster 2
Cluster 1 Cluster 1
Note: in the stage of “Define Data”, the field indicating cluster ID should be
defined as “Cluster”.
Variable-benchmark Model
See Customized Benchmarking
Customized Benchmarking
In customized benchmarking model, you can customize the reference DMU set
for calculating efficiency scores. Take the input-oriented CCR model as an
example,
min 
st  x0  X r   s   0
Y r   y0  s   0
, s , s  0
The superscript r indicates the DMUs included in the customized reference DMU
set R.
39
The above model is also called variable-benchmark model (Zhu, 2009),
because any of the DMUs in R might be a benchmark, but it is not necessary for
all the DMUs in R to be the benchmarks.
To set a variable-benchmark model, open the menu “Run Envelopment Model”,
check the option “Variable-benchmark”, and click the “Define” button to select
variable benchmarks.
Network DEA Model

The Network DEA model deals with such circumstances in which many divisions
(they are called as nodes in MaxDEA) are linked with each other(Tone & Tsutsui,
2009).
1) Each node may and may not have its own inputs and outputs, which are
called as direct inputs/outputs in Network DEA models;
2) At least one node is linked with another node through intermediate
inputs/outputs, which are outputs for one node, and meanwhile are outputs for
the other node.
Network DEA models provides the overall efficiency and the efficiencies of the
nodes in a systematic framework.
40
An example of Network DEA Model (net-shape)
Input 1
Node 1 Output 1
Intermediate 1 Intermediate 2
Input 2 Input 3
Node 2 Intermediate 3 Node 3
Output 2 Output 3
41
An example of Network DEA Model (chain-shape)
Input 1
Node 1
Intermediate 1
Input 2 Input 3
Node 2 Intermediate 2 Node 3
Output 2 Output 3
42
An example of Network DEA Model (chain-shape)
Input
Node 1
Intermediate 1
Node 2
Intermediate 2
Node 3
Output
43
MaxDEA Pro is a powerful tool for Network DEA. It provides the most extensive
options for Network DEA models.
There are 2 options for Network DEA. One is the type of intermediates. There are 4
types of intermediates:
1) Free
2) Fixed
3) Non-increasing
4) Non-decreasing.
If you want the intermediates to be different types, you should choose the “Free” type
and at the same time apply the “Bounded Inputs/Outputs” model. In the Bounded
settings, you may set the lower and upper bounds for the intermediates.
See Bounded Inputs/outputs Model.
The other option is “Use Identical Lambda”. It means that the lambdas for all nodes
are the same.
To run a Network DEA model, you should
1) At the stage of “Define Data”, define the direct inputs/outputs just as usual, but
define indirect inputs/outputs (intermediate inputs/outputs) as “Intermediate”;
2) At the stage of “Run Model”, check the box “Network”, and
a) Decide whether different nodes use same or different intensity vector λ
through the check box “Use Identical Lambda”;
b) Decide whether the intermediate value is free or fixed through the check box
“Fixed Intermediate Value”;
c) Define the Sub-processes of the Network through the “Define” button;
i. Firstly define the nodes for the network, including node name and node
weight;
ii. Secondly, assign the direct inputs, outputs and intermediate to
corresponding nodes. Each input or output must be assigned to one and
only one node, and each intermediate must be assigned to one node as
input and another node as output.
d) Run the model.
In MaxDEA Pro, it is very convenient to compare the results between the traditional
model (so-called “Black box” model) and the Network model. Just uncheck
“Network” with other options unchanged, and it will be the traditional model.
44
There are three tables for the results of the Network models: the first is a summary
just as usual, the second is overall efficiency and slacks and projections, and the last is
efficiency scores of the nodes and the intensity vectors.
Dynamic Model
Dynamic model deals with panel data, and take into consideration the links between
periods. Panel data for Dynamic model must be balanced, i.e., each DMU must have
one and only one observation in each period.
Table 3-3(A) is a panel dataset with one input, one output and one intermediate with
three periods for dynamic model. Note that in MaxDEA Pro, the intermediate in
period 1 is treated as the link between period 1 and 2, the intermediate in period 2 as
45
the link between period 2 and 3, and the intermediate in period 3 is not included in the
dynamic model.
Essentially, dynamic model is a special case of network model, so all dynamic models
can be equivalently achieved through network model. To do so, the panel data (long
data) must be transformed into wide data for network model. Table 3-3(B) is the
equivalent dataset to Table 3-3(A) for the same dynamic model achieved though
network model, which treats the periods as the nodes.
With MaxDEA, more complex dynamic model , such as dynamic model with different
intermediates, inputs and outputs in each period, can be developed through network
model.
46
Table 3-3(A) Panel data for dynamic model (example)
Period DMU Input Output Intermediate
1 A 4323 93608 875
1 B 2295 225559 469
1 C 6379 327068 1286
2 A 6644 201354 1339
2 B 1436 188926 297
2 C 6281 413738 1266
3 A 7459 114022 1502
3 B 4464 212444 903
3 C 4524 462677 915
Structure of the dynamic model
Input(1) Period 1 Output(1)
Intermediate (1)
Intermediate (2)
Table 3-3(B) The equivalent dataset to table 3-3(A) for the same dynamic model
achieved though network model
DMU Input(1) Output(1) Intermediate(1) Input(2) Output(2) Intermediate(2) Input(3) Output(3)
A 4323 93608 875 6644 201354 1339 7459 114022

B 2295 225559 469 1436 188926 297 4464 212444
C 6379 327068 1286 6281 413738 1266 4524 462677
Refer to Tone and Tsutsui (2010a)
47
Results for Envelopment Model
Score
Please note that MaxDEA uses θ as efficiency score in input-oriented model, and
uses 1/φ (the reciprocal of φ) as efficiency score in output-oriented model.
For non-oriented models,
1  Input Inefficiency
Efficiency Score = 1  Output Inefficiency
The score may be technical efficiency, pure technical efficiency, cost, revenue, or
profit efficiency. Its meaning depends on the specific model you develop.
Scale Efficiency
In Radial model, Scale Efficiency = CRS efficiency / VRS efficiency.
In non-radial models, Scale Effect = CRS efficiency / VRS efficiency.
Allocative Efficiency
Allocative Efficiency is not provide directly in MaxDEA. It can be calculated as
follows
Allocative Efficiency = Cost (or Revenue or Profit) Efficiency / Technical
Efficiency
Input Inefficiency
= Input Radial Inefficiency + Input Non-radial Inefficiency
48
Input Radial Inefficiency (for Hybrid model)
 mm1 1   
m: number of inputs; m1: number of radial inputs

Input Non-radial Inefficiency(for Hybrid model)
m2
 1
m s
i 1
i
N R
/ x i No R
m: number of inputs; m2: number of non-radial inputs; NR indicates non-radial

Output Inefficiency
= Output Radial Inefficiency + Output Non-radial Inefficiency
Output Radial Inefficiency(for Hybrid model)
 ss1 (  1)
s: number of outputs; s1: number of radial outputs

Output Non-radial Inefficiency(for Hybrid model)
s2
 1s  srNR  / yroNR
r 1
s: number of outputs; s2: number of non-radial outputs; NR indicates non-radial

Benchmark (λ)
It contains the benchmark DMUs for the evaluated DMU with its λ. In other words,
they are those DMUs in the reference set whose λ isn’t zero.
Times as a benchmark for another DMU
It provides useful information for efficient DMUs (score = 1). If “Times as a
benchmark for another DMU” is zero for an efficient DMU, it means that it is just
efficient by default. There are no other DMUs take it as a benchmark, in other
words, it is a lonely DMU with a special situation in terms of input and outputs.
The more times of an efficient DMU as a benchmark for other DMUs, the more
significant the benchmark is.
Σλ
It is the sum of the value of λ.
49
RTS Estimation
See Returns to scale (RTS)
Original
The original value of inputs/outputs.
Proportionate Movement (Radial Movement)
Only available for radial, directional distance and hybrid models. It is the radial
part of improvement of inputs/outputs, the proportional decrease of inputs or the
proportional increase of outputs. Positive values mean increase, and negative
values mean decrease.
Slack Movement
It’s absolute value is the s- (input slack) or s+ (output slack) in the LP equations.
Positive values indicate increase, and negative values indicate decrease.
Projection
It is the efficient target.
For radial models,
Strong Efficient Projection =Original + Radial Movement + Slack Movement
Weak Efficient Projection = Original + Radial Movement
If strong efficient projection is wanted, it is suggested that “Two Stage” method be
used to compute the slacks (in “Options – Slack Computation”), because the
slacks from the first stage may be incomplete.
For SBM models, Projection =Original + Slack Movement
α, β and γ
The values of α, β and γ in the solution.
RHS Lower Bound and RHS Upper Bound
See Dual Prices and Sensitivity Analysis
Dual Prices and Sensitivity Analysis
The dual price (also named as shadow price, dual value) of an input (output)
indicate that the objective function will change with the value of the dual price if
the value of the right-hand side (RHS) for the input (output) is changed with 1
unit. Note that the sign indicates whether the objective function will increase or
50
decrease.
The dual price remains constant as long as the RHS for the input (output) stays
within the lower/upper bounds. If there is no dual price, or no lower/upper limit,
then these values are positive or negative infinity1.
The absolute values of the dual prices correspond to the values of the weights of
inputs (outputs) in the dual model (Multiplier Model). Note that there often exist
multiple optimal solutions for multiplier model, so the absolute values of the dual
prices got from envelopment model might not be equal to the values of the
weights got from corresponding multiplier model.
1
1E+30 indicates +finite, and -1E+30 indicates -finite.
51
4 Multiplier DEA Model
Scale Elasticity
A quantitative estimate of RTS.
Ref. to Banker and Thrall (1992).
Cross Efficiency Model

Mean cross efficiency is computed in addition to routine efficiency. And if the number of
DMUs is not more than 252, the cross efficiency matrix will be shown in the results.
Note: there usually exist multiple optimal solutions for multiplier models, as a result, the
cross efficiency score of a DMU is usually not unique. Using the “Two Stage” method to
computing input and output weights can reduce the probability of multiple solutions
dramatically.
Assurance Region Model

Trade-offs between Inputs and Outputs

Ref. to Podinovski (2004)
Restricted Multiplier Model

There are two types of restricted multiplier models available in MaxDEA, named as type I
52
and type II respectively. The restricted multiplier model is to add constraints on the ratios
or proportions of weights for inputs/outputs. It is also called Assurance Region model in
literature.
Type I restricted multiplier model is to add constraints on the ratios of weights for
inputs/outputs, such as
2
L1   U1
1
3
L2   U2
1
while Type II restricted multiplier model is to add constraints on the proportion of a (some
or all) weighted (virtual) input/output over the total weighted (virtual) inputs/outputs, for
example, suppose there are two inputs and two outputs, we can restrict their virtual
proportions as follows,
 1 x1
0.1   0.3
 1 x1   2 x2 ,
1 y1
0.1   0.3
1 y1  2 y2 ,
 2 y2
0.5   0.8
1 y1  2 y2 .
Please note that in type II restricted multiplier model, (1) the sum of the lower bounds of
weight proportions must be less than or equal to 1, and (2) the sum of the upper bounds
must be greater than or equal to 1 in case that all the weight proportions of inputs/outputs
are restricted such as the above example, in which all the weight proportions of outputs are
restricted.
To run the restricted multiplier model, set the restrictions first by a click on the “Define”
button on the right side.
If you want to eliminate one piece of restriction, (1)click the arrow on the left, and (2)
press the “Delete” key or use the “delete record button” on the toolbar. You can also
53
disable the restriction through the active check box.
Parallel model
The parallel DEA model takes the operation of individual components of the system into
account in calculating the efficiency.
The data for parallel system must have two columns indicating the DMU and Sub-DMU
respectively.
Ref. to Kao (2009)
Table 4-1 An example for parallel data format
DMU Sub-DMU Capital Labor Product
A a 4323 875 93608
A b 2295 469 225559
A c 6379 1286 327068
B d 6644 1339 201354
B e 1436 297 188926
C f 6281 1266 413738
C g 7459 1502 114022
Variable-benchmark Model
Fixed-benchmark Model
54
Minimum Efficiency Model
Customized Benchmarking
In customized benchmarking model, you can customize the reference DMU set for
calculating efficiency scores. Take the input-oriented CCR model as an example,
max    ' y0
st  ' x0  1
 'Y r  'X r  0
 ,   0 (or  ,    )
The superscript r indicates the DMUs included in the customized reference DMU set.
The above model is also called variable-benchmark model (Zhu, 2009), because any of
the DMUs in R might be the benchmark for a DMU evaluation, but it is not necessary for
all the DMUs in R to be the benchmarks.
If you want one or some DMUs in R to be fixed benchmarks, you can develop a
fixed-benchmark model (Zhu, 2009) as follows, also take the input-oriented CCR
model as an example,
max    ' y0
st  ' x0  1
 'Y f  'X f  0
 'Y n  'X n  0
 ,   0 (or  ,    )
f indicats the fixed benchmarks, and n indicates the non-fixed (variable)

benchmarks.
If change the objective function of the fixed-benchmark model
55
max    ' y0
,
to
min    ' y0
,
The model will change from a maximum efficiency fixed-benchmark model to a
minimum efficiency fixed-benchmark model (Zhu, 2009). Such a change for
output-oriented models is vice versa.
Variable-benchmarking can be applied to both envelopment models and multiplier
models, but fixed-benchmarking can be applied to multiplier models only.
To set a variable-benchmark model, open the menu “Run Multiplier Model”, check the
option “Variable-benchmark”, and click the “Define” button to select variable
benchmarks.
To set a fixed-benchmark model, check the option “Fixed-benchmark”, choose
maximum efficiency or minimum efficiency, and click the “Define” button to select both
variable benchmarks and fixed benchmarks. The selection of variable benchmarks is
optional.
Note: Be cautious about setting the fixed benchmarks. If the fixed benchmarks are not
properly chosen, it will result in infeasible LP.
56
Results for Multiplier Model
Weight
The optimal weight (multiplier) of the inputs (outputs), i.e., the optimal solution of ν
and μ.
Weighted Value
The product of an input (output) and its multiplier, i.e., ν’x0 or μ’y0.
Coefficient Lower Bound and Coefficient Upper Bound
See Sensitivity of Objective Function
Sensitivity of Objective Function
It provides the lower and upper bounds of a coefficient in the objective without causing
any of the optimal values of the decision variables (weights of inputs and outputs) to
change.
Dual Solution
It provides the benchmarks with the values of lambda and the values of projection.
57
5 Productivity Analysis (Malmquist Model)
The Malmquist model deals with panel data. Panel data for Malmquist model and
Window model are not necessary to be balanced, i.e., missing values at some
periods are permitted. If the values for some DMUs in one or more periods are
missing, the Malmquist indices for the relevant periods will not be computed, but
the Malmquist indices for the periods that have complete data will be computed.
In addition, the DMUs with missing values may serve as benchmarks for other
DMUs at the periods that they have data.
The Malmquist productivity index evaluates the total factor productivity change of
a DMU between two periods. It is defined as the product of efficiency change
(catch-up) and technological change (frontier-shift). The efficiency change
reflects to what extent a DMU improves or worsens its efficiency, while
technological change reflects the change of the efficiency frontiers between two
58
periods.
MaxDEA Pro provides 6 types of Malmquist Indices.
Adjacent Malmquist
Mean of 2 TFP Indices
The traditional method of Malmquist index developed by Färe, Grosskopf,
Lindgren, and Roos (1992)
Single TFP Index
A method of Malmquist index that overcome the infeasibility problem proposed
by Cheng and Qian (2012)
Fixed Malmquist
A method of Malmquist index that uses a fixed period as reference proposed by
Berg, Forsund, and Jansen (1992)
Global Malmquist
A method of Malmquist index that uses all periods as reference proposed by
Pastor and Lovell (2005)
Sequential Malmquist
A method of Malmquist index that uses all previous periods as reference. Ref. to
(Tulkens & Vanden Eeckaut, 1995; Shestalova, 2003)
Single TFP Index
A method of Sequential Malmquist index that overcome the infeasibility problem
using the idea by Cheng and Qian (2012).
Window-Malmquist (adjacent)
A method of Malmquist index that uses period window as reference. Ref. to
(Sueyoshi & Aoki, 2001; Asmild, Paradi, Aggarwall, & Schaffnit, 2004)
Single TFP Index
A method of Window-Malmquist index that overcome the infeasibility problem
using the idea by Cheng and Qian (2012).
See Cluster Model, window-benchmarking for the meaning of Width and Offset.
59
Window-Malmquist (fixed)
A method of Window-Malmquist index that uses fixed period window as
reference. The idea is similar with that in Fixed Malmquist proposed by Berg,
Forsund, and Jansen (1992)
See Cluster Model, window-benchmarking for the meaning of Width and Offset.
Cost Malmquist Model

MaxDEA uses the method developed by Maniadakis and Thanassoulis to
compute Cost Malmquist Index, and uses similar methods to compute Revenue,
Profit, and Revenue Cost Ratio Malmquist Indices.
MaxDEA directly provides the first stage decomposition of Cost Malmquist
Index as follows
 Malmquist Index(cost efficiency model) = Efficiency Change (cost
efficiency model) * Technological Change (cost efficiency model)
The second stage decomposition can be attained by running both cost Malmquist
Model and technical efficiency Malmquist Model, and computing its components
as follows
 Allocative Efficiency Change = Efficiency Change (cost efficiency model)
/ Efficiency Change (technical efficiency model)
 Price Effect = Technological Change (cost efficiency model) /
Technological Change (technical efficiency model)
 Malmquist Index(cost efficiency model) = Efficiency Change (technical
efficiency model) * Allocative Efficiency Change * Technological
Change (noraml) * Price Effect
Revenue, Profit and Revenue Cost Ratio Malmquist Indices can be decomposed
similarly.
Maniadakis N, Thanassoulis E. A cost Malmquist productivity index. Eur J Oper
Res. 2004; 154(2): 396-409.
Revenue Malmquist Model

Similar to Cost Malmquist Model.
60
Profit Malmquist Model
Revenue Cost Ratio Malmquist Model

61
Results For Malmquist Models
We try to give an explanation of the Malmquist model in an easy-to-understand

way, with an example supposing that there are two periods, named period 1 (the
“from” period)and period 2 (the “to” period).
Please note that the column names in the results for Cost, Revenue, Profit and
Revenue Cost Ratio Malmquist models are the same as those in the results for
technical efficiency Malmquist Model. For example, in the results for Cost
Malmquist Model, the Malmquist Index is named as “Malmquist Index”, but in
essence, it is “Cost Malmquist Index”.
Efficiency(t)
It is the efficiency calculated with the current period as the reference set. For
example, efficiency(2) is the efficiency in period 2 calculated using the
input/output values in the same period –period 2 as the reference set.
Efficiency(t-1) for adjacent reference
It is the efficiency calculated with the previous period as the reference set. For
example, efficiency(2-1) is the efficiency in period 2 calculated using the
input/output values in period 1 as the reference set.
Efficiency(t+1) for adjacent reference
It is the efficiency calculated with the next period as the reference set. For example,
62
efficiency(1+1) is the efficiency in period 1 calculated using the input/output
values in period 2 as the reference set.
Efficiency_Fixed (t) for adjacent reference
It is the efficiency calculated with a user-defined fixed period as the reference set.
For example, if the reference period is 1, the Efficiency_Fixed (2) is the efficiency
in period 2 calculated using the input/output values in period 1 as the reference set.
Efficiency_Global (t) for global reference
It is the efficiency calculated with all periods as a whole as the reference set. For
example, the Efficiency_Global (2) is the efficiency in period 2 calculated using
the input/output values in period 1 and period 2 as the reference set.
Multiplicative measurement of productivity change
The multiplicative method measures the relative change of productivity. It is the
commonly used method.
For example,
Efficiency Change using multiplicative measurement
Efficiency  t  of the ' to ' period

Efficiency Change 
Efficiency  t  of the ' from ' period
For example, Efficiency Change from period 1 to period 2 is
Efficiency  2 
Efficiency Change (1 TO 2) 
Efficiency 1
Malmquist Index using multiplicative measurement
1) Adjacent reference (Mean of 2 TFP Indices):

 Efficiency  t-1 of the ' to ' period Efficiency  t  of the ' to ' period 
1/2
Adjacent Malmquist Index    

 Efficiency  t  of the ' from ' period Efficiency  t+1 of the ' from ' period 
 Efficiency  2-1 Efficiency  2  

1/2
Adjacent Malmquist Index (1 TO 2)    

 Efficiency 1 Efficiency 1+1 
2) Fixed reference:
Efficiency_Fixed  t  of the ' to ' period
Fixed Malmquist Index 
Efficiency_Fixed  t  of the ' from ' period
63
Efficiency_Fixed  2 
Fixed Malmquist Index (1 TO 2) 
Efficiency_Fixed 1
3) Global reference:
Efficiency_Global  t  of the ' to ' period
Global Malmquist Index 
Efficiency_Global  t  of the ' from ' period
Efficiency_Global  2 
Global Malmquist Index (1 TO 2) 
Efficiency_Global 1
Technological Change using multiplicative measurement
Malmquist Index
Technological Change 
Efficiency Change
Note: Malmquist Indices, Efficiency Change and Technological Change
with fixed or global reference are circular. For example,
Fixed MI (1 TO 2) * Fixed MI (2 TO 3) = Fixed MI (1 TO 3).
In addition, Global Malmquist model with non-CRS technology doesn’t
suffer from the infeasibility problem.
Relationship between Malmquist results using multiplicative

measurement
MaxDEA provides Malmquist Index and its components (efficiency change

and technological change) for not only CRS but also VRS and other types of
RTS.
MaxDEA Pro provides three indicators for the scale effect in Malmquist
model, with the following relationships
 Efficiency change (CRS)* Technological Change (CRS) = Malmquist
Index (CRS)
 Efficiency change (VRS)* Technological Change (VRS) = Malmquist
Index (VRS)
 Scale Effect on Efficiency Change(SEEC) = Efficiency Change (CRS) /
Efficiency Change (VRS)
In Radial model, Scale Effect on Efficiency Change(SEEC) is “Scale
Efficiency Change”.
64
 Scale Effect on Technological Change (SETC) = Technological Change
(CRS) / Technological Change (VRS)
 Scale Effect on Malmquist Index (SEMI) = Malmquist Index (CRS) /
Malmquist Index (VRS)
 SEMI = SEEC* SETC
 Malmquist Index (CRS) = Malmquist Index (VRS) * SEMI
 Malmquist Index (CRS) = Malmquist Index (VRS) * SEEC* SETC
See 12.1 How to get the decomposition of the Malmquist Index in the literature
using MaxDEA Pro?
65
Additive measurement of productivity change
The additive method measures the absolute change of productivity.
For example,
Efficiency Change using additive measurement
Efficiency Change  Efficiency  t  of the ' to ' period  Efficiency  t  of the ' from ' period
For example, Efficiency Change from period 1 to period 2 is
Efficiency Change (1 TO 2)  Efficiency  2   Efficiency 1
Malmquist Index using additive measurement
1) Adjacent reference (Mean of 2 TFP Indices):

Adjacent Malmquist Index  12 
{[Efficiency  t-1 of the ' to ' period  Efficiency  t  of the ' from ' period ] 
[Efficiency  t  of the ' to ' period  Efficiency  t+1 of the ' from ' period ]}
Adjacent Malmquist Index (1 TO 2)  12 

{[Efficiency  2-1  Efficiency 1] 
[Efficiency  2   Efficiency 1+1]}
2) Fixed reference:
Fixed Malmquist Index 
Efficiency_Fixed  t  of the ' to ' period  Efficiency_Fixed  t  of the ' from ' period
Fixed Malmquist Index (1 TO 2)  Efficiency_Fixed  2   Efficiency_Fixed 1
3) Global reference:
Global Malmquist Index  Efficiency_Global  t  of the ' to ' period  Efficiency_Global  t  of the ' from ' period
Global Malmquist Index (1 TO 2)  Efficiency_Global  2   Efficiency_Global 1
Technological Change using additive measurement
Technological Change  Malmquist Index  Efficiency Change
Note: Malmquist Indices, Efficiency Change and Technological Change

with fixed or global reference are circular. For example (Additive method),
66
Fixed MI (1 TO 2) + Fixed MI (2 TO 3) = Fixed MI (1 TO 3).
In addition, Global Malmquist model with non-CRS technology doesn’t
suffer from the infeasibility problem.
Relationship between Malmquist results using additive measurement
 Efficiency change (CRS) + Technological Change (CRS) = Malmquist

Index (CRS)
 Efficiency change (VRS) + Technological Change (VRS) = Malmquist
Index (VRS)
 Scale Effect on Efficiency Change(SEEC) = Efficiency Change (CRS) -
Efficiency Change (VRS)
 Scale Effect on Technological Change (SETC) = Technological Change
(CRS) - Technological Change (VRS)
 Scale Effect on Malmquist Index (SEMI) = Malmquist Index (CRS) -
Malmquist Index (VRS)
 SEMI = SEEC + SETC
 Malmquist Index (CRS) = Malmquist Index (VRS) + SEMI
 Malmquist Index (CRS) = Malmquist Index (VRS) + SEEC + SETC
67
7 Bootstrapping DEA Scores and Malmquist Indices
Method of Bootstrapping
MaxDEA Pro provides two types of bootstrap method: one is that proposed by
Simar and Wilson (1998), and the other is by Simar and Wilson (1999).
Method of Compute Confidence Intervals

Five methods are available to calculate the confidence intervals (CI) of
bootstrapped DEA scores and Malmquist indices. The CI can be computed using
the DEA scores or the reciprocal of the DEA scores.
Bootstrapped Scores
The confidence intervals are calculated using the original unadjusted scores.
Original Score - Bootstrapped Bias
The confidence intervals are calculated using the bias-adjusted scores proposed
by Simar and Wilson (2000).
Bootstrapped Scores - 2* Mean of Bootstrapped Bias
by Simar and Wilson (1998).
Original Score / (1+ Bootstrapped Bias/Original Score)
by Kneip, Simar, and Wilson (2008).
68
Original Score / (1+ Bootstrapped Bias)
The confidence intervals are calculated using the bias-adjusted scores. The scores
are adjusted by
Adjust Score = Original Score / (1+ Bootstrapped Bias).
Smoothed Bootstrap
Whether the smoothed bootstrapping is used.
Avoid Over-Smooth
It is useful when some DMUs have very small efficiency scores. It can avoid
negative bootstrapped scores.
Random Numbers for Panel Data

There are two types of random number series that can be used for bootstrapping
Malmquist indices. One is bivariate normal distributed random series, which is
used by Simar and Wilson (1999); the other is multivariate normal distributed
random series.
Number of replications
Bootstrapping is a time-consuming analysis. The running time is approximately
the product of time for a single DEA or Malmquist model and the number of
replications.
Alpha for Confidence Interval

Set the level of alpha to calculate CIs.
Simplify Results
Some bootstrapping details are compressed.
Re-compute Confidence Intervals for Existing Bootstrap Results

Re-compute the CIs using the last bootstrapped results. It can save much time
when multiple types of CIs are needed.
Results from Bootstrapping DEA scores

The result window “Bootstrap” reports the summary of the bootstrapping.
69
Score(Original)
The original efficiency score.
Bias
The average (mean) bias of bootstrapped scores..
Mean
The mean of the bias-corrected bootstrapped scores.
Median
The median of the bias-corrected bootstrapped scores.
SD
The standard deviation of the bias-corrected bootstrapped scores.

CI_LowerBound
The lower bound of the CIs.
CI_UpperBound
The upper bound of the CIs.
All the detailed bootstrapped results can be obtained from result tables in
MaxDEA Pro through the Menu “Tools-Browse Results”
70
Table 7-1: Result tables for bootstrapping DEA scores
Table Name Contents
Tbl_Results_Summary the summary of the DEA model
Tbl_Results of Envelopment Model the original bootstrapped scores
(Envelopment model or dual solution of
Multiplier model )
Tbl_Results_Weights the original bootstrapped scores
(Multiplier model or dual values of
Envelopment model )
Tbl_Results of Bootstrap Summary of Bootstrap
Results from Bootstrapping Malmquist indices

1) RTS = CRS, VRS, NIRS, NDRS or GRS
The result window “Bootstrap” reports only the summary of the bootstrapping:
the CIs for Efficiency Change(EC),
Technological Change(TC) and
Malmquist Index(MI).
All the detailed bootstrapped results, including the original and adjusted
bootstrapped Malmquist indices, the bias-corrected mean, median, lower bound
and upper bound can be obtained from the result tables in MaxDEA Pro.
71
Table 7-2: Result tables for bootstrapping Malmquist indices
(RTS=CRS, VRS, NIRS, NDRS, GRS)
Table Name Contents
Tbl_Results of Malmquist Model the original bootstrapped Malmquist
indices
Tbl_Results of Malmquist Model_Adjusted the bias-corrected bootstrapped Malmquist
indices
Tbl_Results of Bootstrap_Mean the mean of the bias-corrected

bootstrapped Malmquist indices
Tbl_Results of Bootstrap_Median the median of the bias-corrected
bootstrapped Malmquist indices
Tbl_Results of Bootstrap_LowerBound the lower bound of the CIs
Tbl_Results of Bootstrap_UpperBound the upper bound of the CIs
Tbl_Results of Bootstrap_CI the CIs
72
2) RTS = Scale Efficiency or Scale Effect (CRS Score / VRS Score)
The result window “Bootstrap” reports the summary of the bootstrapping: the CIs
for
Scale Effect on Efficiency Change(SEEC),
Scale Effect on Technological Change(SETC) and
Scale Effect on Malmquist Index(SEMI).
All the detailed bootstrapped results, including the original and adjusted
bootstrapped Malmquist indices under CRS and VRS, the bias-corrected mean,
median, lower bound and upper bound for scale effect, can be obtained from the
result tables in MaxDEA Pro.
73
Table 7-3: Result tables for bootstrapping scale effect on Malmquist indices
(RTS= “Scale Efficiency or Scale Effect (CRS Score / VRS Score)”)
Table Name Contents
Tbl_Results of Malmquist Model_CRS the original bootstrapped Malmquist
indices (RTS=CRS)
Tbl_Results of Malmquist Model_CRS_Adjusted the bias-corrected bootstrapped Malmquist
indices (RTS=CRS)
Tbl_Results of Malmquist Model_VRS the original bootstrapped Malmquist

indices (RTS=VRS)
Tbl_Results of Malmquist Model_VRS_Adjusted the bias-corrected bootstrapped Malmquist
indices(RTS=VRS)
Tbl_Results of Malmquist Model_ Adjusted the bias-corrected bootstrapped scale effect
on Malmquist indices
Tbl_Results of Bootstrap_Mean the mean of the bias-corrected
bootstrapped scale effect on Malmquist
indices
Tbl_Results of Bootstrap_Median the median of the bias-corrected
bootstrapped scale effect on Malmquist
indices
Tbl_Results of Bootstrap_LowerBound the lower bound of the CIs for scale effect
Tbl_Results of Bootstrap_UpperBound the upper bound of the CIs for scale effect
Tbl_Results of Bootstrap_CI the CIs for scale effect
74
8 Options
Result Decimals
It sets the decimals of results.
Slack Computation
You can choose a second stage calculation for slacks in radial models by using this
option.
Take CCR model as an example,
A two stage model carries out the LP with the following objective
min    (es   es  )
,
1st stage: min  ,
75
2nd stage: max es   es  ,
while one stage model only carries out the 1st stage model.
Big M
The big M is used in the mixed integer linear programming of Minimum Distance
to Strong Efficient Frontier. There are three types of methods to set a big M: The
first type lets MaxDEA automatically find a proper Big M for each DMU; the
second lets MaxDEA automatically find a proper Big M for the 1st DMU and apply
it to all the DMUs; and the last lets the user set the value. The first type is
recommended.
Epsilon for Modified Orientations

This option sets the value of epsilon in the modified orientations.
See Orientation in Section 3 Envelopment DEA model
No optima
Using this option, you can decide whether the score will be set to be 1 in case of no
optima. The problem of no optima often takes place in Super-efficiency,
Malmquist, and variable-benchmark and fixed-benchmark models.
Note: No optima may be infeasible, unbounded, degenerative or numerical
failure.
Display Progress Bar

This option decides whether the progress bar is displayed while MaxDEA is
running.
Weight Computation
Using the two stage method in Multiplier Model, the weights will be re-computed
in the second stage, with the objective of minimizing (or maximizing) the average
efficiency of other DMUs. This method is especially useful for computing cross
efficiencies since there usually exist multiple optimal solutions in multiplier
models.
76
Specify the value of epsilon
The epsilon in Multiplier Model is set to be 0 in default. Be cautious to change this
parameter. If it is not properly set, infeasible LP may occur.
Set timeout for solver

It sets a timeout in seconds for the LP solver. The solve may not last longer than
this time or it will return with a timeout.
Export LP
Linear programming equations of DEA models can be exported to text files with
three formats: matrix format (*.txt), mps format (*.mps) and lp format(*.lp). It is
very useful to help DEA users to develop their own DEA models using a general
LP software.
LP equations are the core of DEA models, exporting LP equations is also helpful to
verify the results of DEA models.
The user can choose to export LP for the first DMU only, or for all the DMUs, or
not to export LP. In addition to LP equations, value of the objective function and
values of all variables in the optimal solution are also exported. (See details in
MaxDEA Linear Programming Manual.)
77
9 Browse and Export Results
Browse results
After running your model, the results will show automatically in the result form.
You can also browse the results in the result tables saved in MaxDEA Pro. It is
more convenient to copy or export the results.
Export results to Excel or other database
The results can be exported to Excel and other types of databases, such as Access,
dBase. Other types of databases are useful when the results exceed the maximum
rows in Excel.
Note: Export results to other types of database may require that MS Access be a
full installation.
78
10 How to buy and register MaxDEA Pro
MaxDEA Basic can be downloaded at http://www.MaxDEA.cn free. It is fully
functional with basic DEA models. MaxDEA Basic will be upgraded to MaxDEA Pro
after registration.
Steps for registration of fixed licence:
1) Buy a licence online;
2) Open MaxDEA Basic, click the menu “Tools – Register and Upgrade to MaxDEA
Pro”, and send the “Machine Code” to MaxDEA@qq.com;
3) You will receive the registration code by email in days (within 1 day in most
cases);
4) Fill in the “Registration Code ” sent to you, click the button “Register”.
Steps for registration of portable licence
1) Buy a licence online;
2) Remove all the removable disks (USB disks) from your computer temporarily;
3) Plug the flash disk you want to use as the USB key for MaxDEA into your
computer;
4) Open MaxDEA Basic (the MaxDEA file can be placed anywhere, not necessarily in
the USB disk), click the Menu “Tools – Register and Upgrade to MaxDEA Pro”,
remember to check the option box "Portable licence", and send the "Machine
Code" to MaxDEA@qq.com;
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5) You will receive the "Registration Code" by email in days (within 1 day in most
cases);
6) Fill in the "Registration Code", and click the button "Register".
Note:
1) The portable licence holder can use MaxDEA on any computer the USB key is
plugged into.
2) The flash disk used for USB key is prepared by the user. Please ensure that the flash
disk is of high quality;
3) The "Machine Code" for portable licence should begin with the letter "U", such as
"U60A-U123456";
4) Every time MaxDEA is used, plug in the USB key first, and do not remove it until
MaxDEA is closed.
MaxDEA update is very convenient. Just download an updated version of MaxDEA
Basic from http://www.MaxDEA.cn, and register it with your registration code.
Any problem, please contact MaxDEA@qq.com
Home page: http://www.MaxDEA.cn
80
11 Frequently asked questions （FAQ）
1) I cannot find the “setup” file in the downloaded zip file, why?
MaxDEA doesn’t need installation. The only file needed to run MaxDEA is the
mdb file (such as MaxDEA 4.mdb). All the data needed to develop a DEA model,
including dataset and model options, are permanently stored in this file, which
means that after closing and reopening the file, the database and model options are
still there unchanged. MaxDEA provides extreme convenience to develop DEA
models and keep backups of the models. If you want to keep a backup of a DEA
model, just rename it as you want, such as Model_CCR.mdb, it is a full backup of
the DEA model.
2) Why I cannot open the program file (mdb file), why?
MaxDEA is developed with VBA for Access, so Microsoft Access is required for
running MaxDEA.
If you cannot open the program file (the file with extension “mdb” cannot be
recognized), it indicates that Microsoft Office Access is not installed in your
computer, and you must install MS Access 2003, 2007 or 2010 (Professional OR
Runtime) first. Access Runtime can be downloaded free at Microsoft website.
3) After registration, Can I use MaxDEA on multiple computers?
MaxDEA has two types of licences.
One is fixed licence, which is bonded to a computer and can be used in this
computer only. The licence will not be affected by reinstalling system or
formatting hard disk.
The other is portable licence. This licence type uses a flash disk as the USB key.
The license holder may work with MaxDEA on any computer the USB key is
plugged into. The flash disk is prepared by the user.
4) How to update MaxDEA to a higher version? Is update free?
Update to a minor higher version within the same major version is free of charge.
For instance, MaxDEA Pro 5.0 can be updated to 5.x free.
81
MaxDEA update is very convenient. Just download an updated version of
MaxDEA Basic from http://www.MaxDEA.cn, and register it with your
registration code.
5) How to backup my DEA models?
MaxDEA provides extreme convenience to develop DEA models and keep
backups of the models. If you want to keep a backup of a DEA model, just rename
it as you want, such as Model_CCR.mdb, it is a full backup of the DEA model.
6) When I reopen MaxDEA, the data and model options are missing, why?
If you open MaxDEA directly in the zip file, the data may be lost after the program
file is closed. It is strongly suggested that you unzip the file (MaxDEA.zip) first.
7) Can MaxDEA run multiple models at the same time? If yes, how to do it?
Multiple models can be run at the same time. Because the only files needed for
running the program is MaxDEA.mdb, you can rename or copy this file freely.
Each copy of this file contains one DEA model with all its data and model options
saved in the file. And you can open and run multiple files simultaneously.
8) How to deal with zeros in inputs or outputs in MaxDEA?
There are many methods to deal with zero data in the literature. One easy approach
is replacing zeros with a small number, such as 0.01. Please note that a too small
number might cause a numerical problem in linear programming. Suppose, the
value of input1 of DMU1 is 100000000, and the value of input1 of DMU2 is 0. If
you replace the zero with 0.0000001, it will cause a error in solving the linear
program.
9) What is the largest number of DMUs that MaxDEA can deal with?
Theoretically the number of DMUs that MaxDEA can deal with is unlimited. We
have tested with a dataset with 20000 DMUs. Please note that the computing time
will increase dramatically when the number of DMUs increases.
10) MaxDEA terminates with a message “Inputs must be numeric”
Please check your data. There may be spaces in the data, which will be treated as
strings. This problems often take place when you copy the data from a pdf file.
Remove the spaces from the data, or do it in your original dataset and import the
82
data again.
11) When I import data from Excel, MaxDEA terminates with a message “The
search key was not found in any record ”
The first row of the Excel sheet contains column names, and there must not be
spaces left to the column names. For example, column names such as “ Input1”
will result in an error. But spaces in the middle of column names or right to the
column names, such as “Input1 ” and “Input 1”, are permitted, but not
recommended.
This problems often take place when you copy the data from a pdf file.
Remove the spaces from your data in Excel and import the data again.
In addition, this problem may also result from non-uniqueness of the column
names. The column name must be unique for each column.
12) MaxDEA terminates with a message “There is no object in this control ” or
“The progress bar cannot be correctly displayed. You can either close the
progress bar in MaxDEA Options or fix this problem in your Windows
system…..
MaxDEA uses an ActiveX control “Microsoft Progress Bar” to display the
progress during the model is running. This error indicates that the ActiveX control
library “Microsoft Common Controls” is not registered or the registration is
deleted by mistake. You can either close the progress bar in MaxDEA or fix this
problem in your Windows system as follows.
A) Re-register the ActiveX control library in the Windows system.
Find the file “cmd.exe” in the folder “C:\Windows\System32”, double-click it
to open a command window. If you use Windows Vista, 7 or 8, right-click it
and run as administrator.
In the command window, run
regsvr32.exe C:\Windows\System32\mscomctl.ocx
If you use the 64-bit Windows, run
regsvr32.exe C:\Windows\SysWOW64\mscomctl.ocx
B) Close the Progress Bar in MaxDEA Options.
83
84
12 Appendix
12.1 How to get the decomposition of the Malmquist Index in the
literature using MaxDEA Pro?

Cheng Gang
Note: all the following discussion is based on the Radial model.
Using MaxDEA Pro, a most comprehensive decomposition of the Malmquist Index can
be achieved.
A. Composition of FGLR
Färe R, Grosskopf S, Lindgren B, Roos P. Productivity changes in Swedish
pharamacies 1980–1989: A non-parametric Malmquist approach. J Prod Anal.
1992; 3(1-2): 85-101.
“By allowing for inefficiencies, the productivity index can be decomposed into two
components, one measuring change in efficiency and the other measuring
technical change or equivalently change in the frontier technology.”
MI
EC TC
In MaxDEA Pro, set the “RTS” to “Constant (CRS)”, and the Malmquist Index
and its decomposition are those according to FGLR.
In the results of MaxDEA, change in efficiency or efficiency change (EC) are
named as “Efficiency Change (t to t+1)”; technical change (TC) are named as
“Technological Change (t to t+1)”
The Malmquist Index (MI) =EC*TC
B. Composition of FGNZ
Fare R, Grosskopf S, Norris M, Zhang Z. Productivity Growth, Technical Progress,
and Efficiency Change in Industrialized Countries. Am Econ Rev. 1994; 84(1):
66-83.
“We use an enhanced decomposition of the Malmquist index developed in Rolf Fare
et al. (1994). This enhanced decomposition takes the efficiency-change component
85
calculated relative to the constant-returnsto- scale technology and decomposes it
into a pure efficiency-change component (calculated relative to the
variable-returns technologies) and a residual scale component which captures
changes in the deviation between the variable-returns and constant returns-
to-scale technology.”
The composition of FGNZ is a further decomposition based on FGLR as follows.
MI
EC TC
PEC SEC
PEC: Pure efficiency change or pure technical efficiency change

SEC: Scale efficiency change
MI = EC * TC = PEC * SEC * TC
In MaxDEA Pro, three steps are needed to get the above compositions:
1) set the “RTS” to “Constant (CRS)”, you can get the EC, TC and MI;
2) set the “RTS” to “Variable (VRS)”, the “Efficiency Change (t to t+1)” in the
results is PEC; and
3) set the “RTS” to “Scale Efficiency or Scale Effect (CRS Score / VRS Score)”,
the “Scale Effect on Efficiency Change (t to t+1)” in the results is SEC.
C. Composition of Ray and Desli

Ray SC, Desli E. Productivity growth, technical progress, and efficiency change in
industrialized countries: Comment. Am Econ Rev. 1997;87(5):1033-9.
“This decomposition of the Malmquist productivity index is quite different from the
extended decomposition performed by FGNZ." The only factor which is identical is
PEFFCH (PEC). As for the technical change factor, ours is a geometric mean of
the ratios of VRS distance functions whereas FGNZ measure technical change by
the geometric mean of the ratios of CRS distance functions. Also, the other factor
relating to scale efficiency change differs in the two decompositions. FGNZ's scale
change factor (SCH) is simply the ratio of the scale efficiencies of the bundles using
own-period VRS technologies as the benchmark. Our measure, SCH(v). is a
geometric mean of the ratios of scale efficiencies of the two bundles using in turn
the VRS technologies from the two periods as the benchmark.”
86
MI
PEC PTC SCH
In the figure, PTC is the technical change factor (TECHCH ) by Ray and Desli.
1) set the “RTS” to “Constant (CRS)”, you can get the MI;
results is PEC and the “Technological Change (t to t+1)” in the results is PTC;
the “Scale Effect on Malmquist (t to t+1)” in the results is SCH.
MI = PEC * PTC * SCH
D. Composition of Zofio
Zofio, J.L., Malmquist productivity index decompositions: a unifying framework.
Applied Economics, 2007. 39(18): 2371-2387.
Zofio provides a more complete decomposition of Malmquist Index as follows.
It can be seen as a further composition on the basis of FGNZ
MI
EC TC
PEC SEC PTC STC
1) set the “RTS” to “Constant (CRS)”, you can get the EC, TC and MI;;
results is PEC and the “Technological Change (t to t+1)” in the results is PTC;
the “Scale Effect on Efficiency Change (t to t+1)” in the results is SEC, and the
“Scale Effect on Technological Change (t to t+1)” in the results is STC.
It can also be seen as a further composition on the basis of Ray and Desli.
87
MI
PEC PTC SCH
SEC STC
88
12.2 How to get the Luenberger productivity index and
Malmquist–Luenberger Index using MaxDEA Pro?

Cheng Gang
A. Luenberger productivity index

Key points on the Luenberger index
1) Based on the benefit function by Luenberger (1992), Chambers, Chung, and
Färe (1996) put force the directional input distance function.
2) Chung (1996) introduced the directional output distance function and its
application to undesirable outputs.
3) Chambers, Färe, and Grosskopf (1996) defined the Luenberger productivity
index based on the directional distance function.
Get Luenberger productivity index using MaxDEA
1) Set the “Distance” to “Directional Distance”;
2) Choose the Malmquist model (in the tab “Advanced Models 2”); and
3) Choose “Additive and Arithmetic Mean” for “Method to Compute Index” in
the tab “Advanced Models 2”.
The results are for Luenberger productivity index.
B. Malmquist –Luenberger productivity index

Key points on the Malmquist–Luenberger index
1) Färe, Grosskopf, Lindgren, and Roos (1992) defined the Malmquist
productivity index based on DEA;
2) Chung, Färe, and Grosskopf (1997) applied the directional distance function to
the Malmquist index, and defined the Malmquist–Luenberger index, which
deals with undesirable outputs.
Get the Malmquist–Luenberger index using MaxDEA
1) Set the “Distance” to “Directional Distance”;
2) Choose the Malmquist model (in the tab “Advanced Models 2”);
3) Define the “Undesirable Outputs” (in the tab “Advanced Models”); and
89
4) Choose “Multiplicative and Geometric Mean (Commonly used)” for “Method
to Compute Index” in the tab “Advanced Models 2”.
The results are for Malmquist–Luenberger productivity index.
90
12.3 How to calculate MetaFrontier Malmquist and its components
using MaxDEA?
Cheng Gang
The MetaFrontier Malmquist proposed by Oh and Lee (2010) is essentially the same as
the Global Malmquist proposed by Pastor and Lovell (2005). Their difference is that
Oh and Lee (2010) add a "Group" factor to the Global Malmquist. After introducing
such a group factor, the MetaFrontier Malmquist is decomposed as follows.
MetaFrontier Malmquist = EC * BPC * TGC
Where MetaFrontier Malmquist = Global Malmquist without grouping
EC= Efficiecncy Change using traditional contemporaneous Malmquist
method within a group
BPC= Technological Change using global Malmquist method within a group
TGC = MetaFrontier Malmquist/ EC / BPC
The MetaFrontier Malmquist and its components can be calculated in a batch mode as
follows.
1) A Group variable must be added in the dataset. It should be defined as "Cluster"
in the "Data Definition" window;
2) MetaFrontier Malmquist = “Malmquist Index” in Global Malmquist model
(analyze all groups as a whole);
3) EC = “Efficiency Change” in Global Malmquist model in conjunction with
“Benchmarking by Cluster - Self-benchmarking” method;
4) BPC = “Technological Change” in Global Malmquist model in conjunction with
“Benchmarking by Cluster - Self-benchmarking” method;
5) TGC = MetaFrontier Malmquist/ EC / BPC.
91
12.4 An epsilon-based measure of efficiency in DEA - An alternative
method for the affinity index

Cheng Gang, Qian Zhenhua
1．Introduction
Data envelopment analysis (DEA) is a linear programming methodology to
evaluate the technical efficiency for each member of a set of peer decision making units
(DMUs) with multiple inputs and multiple outputs. There are mainly two types of
approaches to measuring technical efficiency in DEA: radial and non-radial. The radial
measure was first introduced by the CCR model developed by Charnes, Cooper, and
Rhodes (1978). The non-radial model is represented by the widely used slacks-based
measure (SBM model) developed by Tone (2001). On the basis of these two types of
measures, Tone and Tsutsui (2010b) introduced a hybrid model (epsilon-based measure,
EBM), which combines both radial and non-radial measures in a unified framework. In
the EBM model, there are two parameters that need to be determined: a scalar named as
epsilon indicating the relative importance of the non-radial measure over the radial
measure, and a vector indicating the weights of inputs or outputs. To compute these two
parameters, Tone and Tsutsui (2010b) constructed an affinity matrix and then the
largest eigenvalue of the defined affinity matrix was used to compute the epsilon, and
its associated nonnegative eigenvector was used to compute the weights of inputs or
outputs. However, we find their method to construct the affinity matrix may be
questionable. Their method may not reflect the true degree of scattered distribution of
inputs or outputs. Based on Tone & Tsutsui’s idea, we introduced an alternative method
of constructing the affinity matrix, which overcomes the drawback of their method.
2．An epsilon-based measure (EBM) of efficiency
The input-oriented EBM model under constant returns to scale technology is used
for demonstration. It can be easily extended to out-orientation and variable returns to
scale. The EBM model is defined as follows:
92
m
wi si
 *  min    x 
i 1 x0
subject to  x0  X   s   0,
Y   y0 ,
  0, s   0.
where wi is the weight (relative importance) of input i and satisfies

m
i 1
wi  1 (wi  0 i) , and εx is a key parameter which indicates the relative
importance of the non-radial slacks over the radial θ. Parameters εx and wi must be
supplied prior to the efficiency measurement, and they should be units-invariant values.
To determine the two parameters, Tone and Tsutsui (2010b) constructed an affinity
index between two input vectors instead of the Pearson’s correlation coefficient. The
affinity index S(a,b) between the vector a and vector b has the following properties.
(P1) Identical: S(a,a) = 1,
(P2) Symmetric: S(a,b) = S(b,a),
(P3) Units-invariant : S(ta,b) = S(a,b) (t > 0), and
(P4) 1≥S(a,b)≥0.
The ‘‘affinity index” S(a,b) was defined as follows:
S(a,b)=1-2D(a,b)
D(a,b) is a diversity index, which indicates the degree of scattered distribution, and
was defined as follows:
n | cj  c |
 j 1 (if cmax  cmin )
D (a, b)   n(cmax  cmin ) ,

 0 (if cmax  cmin )

n
where c j  ln a jj , c  ln a jj , cmax  max(c j ) , and cmin  min(c j ) .
b 1 b
n j 1
The largest value of eigenvalue ρ of the affinity matrix S was used to compute the
epsilon, and its associated nonnegative eigenvector wx was used to compute the weights,
as follows.
m  max(  x )
x  , and
m 1
93
wx
w  m
.
wi 1
xi
As discussed in the paper by Tone and Tsutsui (2010b), in the narrow range case,
the affinity index should approximate to 1; and in the widely scattered case, the affinity
index should approximate to 0. In their paper, they give an widely scatted example
(example 2 in their paper), the computed affinity index between x1 and x2 is 0.
However their example is too simple to illustrate the rationale of the index, it has only 2
SBM-efficient DMUs. When we apply their method to a completely scattered case
which has more than 2 efficient DMUS, we get questionable results.
The following example data have two inputs (x1 and x2) and one output (Table1).
For the 5 efficient DMUs (A-E), a decrease in x1 is always accompanied by an equal
amount of increase in x2, which shows the complete substitutability between the two
inputs. The complete negative linear correlation exists between x1 and x2 in the frontier
(Figure 1).
Table 1 Example data
DMU x1 x2 y
A 1 5 1
B 2 4 1
C 3 3 1
D 4 2 1
E 5 1 1
F 3 4 1
G 4 3 1
94
A
5
B F
4
C G
3
x2
D
2
E
1
0
0 1 2 3 4 5
x1
Figure 1 Example data (completely scattered)

According to the rationale of the affinity index, its value should be 0 in such an
scattered case. However using the above method, the computed value of the affinity
index between x1 and x2 is 0.428, and the epsilon is 0.572. This result contradicts the
rationale of the affinity index. (Table 2 and table 3)
Table 2 Diversity matrix for the example data
DMU x1 x2
x1 0 0.286
x2 0.286 0
Table 3 Affinity matrix for the example data
DMU x1 x2
x1 1 0.428
x2 0.428 1
3. An alternative method of computing the affinity index

The questionable result of the affinity index using the method proposed by Tone
and Tsutsui (2010b) makes us turn back to the traditional Pearson’s correlation
coefficient. The Pearson’s correlation coefficient conforms to the first three properties
(P1-P3), but violates the last property (P4). Although the range of the Pearson’s
correlation coefficient is [-1, 1], it can be adjusted into [0, 1] according its relationship
between the Pearson’s correlation coefficient and the rationale of the affinity
index(Figure 2). In the narrow range case, the two inputs are highly dependent on each
95
other, the Pearson correlation coefficient is equal to or approximate to 1, and the affinity
index should be equal to or approximate to 1; while in the widely scattered case, the two
inputs are highly substitutable for each other, the Pearson correlation coefficient is
equal to or approximate to -1, and the affinity index should be equal to or approximate
to 0. According to the relationship, the new affinity index can be defined as
S(a,b)=0.5+0.5r(a,b),
where r(a,b) is the Pearson correlation coefficient between a and b.
The new affinity index conforms to all the 4 properties, and overcomes the
shortcoming of the method proposed by Tone & Tsutsui (2010) .
Pearson correlation coefficient
-1 0
High substitutability +1 High dependency
between x1 and x2 between x1 and x2
ε＝1 ε＝0
0 0.5
1
The new affinity index
Figure 2 Relationship between the Pearson correlation coefficient and the new affinity
index
The new affinity index between x1 and x2 of the example data in table 1 is
S(x1,x2)=0.5+0.5 r(x1, x2)=0.5+0.5(-1)=0.
The new affinity matrix is listed in table 4.
Table 4 New affinity matrix for the example data
DMU x1 x2
x1 1 0
x2 0 1
The largest eigenvalue and eigenvector of the new affinity matrix are max(ρx) = 1.
m  max(  x ) 2  1
So we have  x    1 . This result conforms to the rationale of the
m 1 2 1
affinity index defined by Tone and Tsutsui (2010b).
96
12.5 Overcoming the infeasibility of the super-efficiency DEA model:
A model with generalized orientation
Cheng Gang, Qian Zhenhua, Panagiotis D. Zervopoulos
1. Introduction
Data envelopment analysis (DEA), originally developed by Charnes et al. (1978)(Charnes,

Cooper, & Rhodes, 1978), is a linear programming methodology for evaluating the relative
technical efficiency for each member of a set of peer decision making units (DMUs) with
multiple inputs and multiple outputs. In practice, DEA is a dominant methodology for
measuring performance that has been applied in many areas such as banking (Portela &
Thanassoulis, 2007; Doumpos & Zopounidis, 2010), universities(Casu & Thanassoulis, 2006),
and technology companies (Serrano-Cinca, Fuertes-Callen, & Mar-Molinero, 2005; Mannino,
Hong, & Choi, 2008). Despite the widespread applicability of DEA, one of its weaknesses on
which we stress our study is that, typically, multiple units can be evaluated as efficient,
especially when the number of inputs and outputs is large. Anderson and Petersen
(1993)(Andersen & Petersen, 1993) developed the super-efficiency (SE) model, which can be
used to overcome this weakness. The SE model is similar to the standard model; the difference
is that the DMU under evaluation is excluded from the reference set. SE score is an efficiency
measure of a DMU relative to the frontier created by the remaining DMUs. The SE model has
been used in ranking efficient DMUs (Andersen & Petersen, 1993(Andersen & Petersen, 1993);
Xue & Harker, 2002(Xue & Harker, 2002); Chen, 2005(Chen, 2005); Ray, 2008(Ray, 2008)),
identifying outliers (Wilson, 1995(Wilson, 1995); Banker & Chang, 2006(Banker & Chang,
2006)), sensitivity and stability analysis(Charnes et al., 1992(Charnes, Haag, Jaska, & Semple,
1992); Seiford & Zhu, 1998(Seiford & Zhu, 1998a, 1998b); Zhu, 1996, 2001(Zhu, 1996; Zhu,
2001)), measuring productivity changes (Färe et al., 1992(Färe, Grosskopf, Lindgren, & Roos,
1992); Berg et al., 1992(Berg, Forsund, & Jansen, 1992)), and solving two-player games
(Rousseau & Semple, 1995(Rousseau & Semple, 1995)).
However the SE model may not have feasible solutions under the assumption of variable,
non-increasing or non-decreasing returns to scale (VRS, NIRS, NDRS). Many efforts have
been made to address this problem. Seiford and Zhu (1999) provided necessary and sufficient
conditions for infeasibility of the input-oriented and output-oriented SE-VRS DEA models.
Lovell and Rouse (2003) (Lovell & Rouse, 2003) developed an equivalent standard DEA model
to provide SE-VRS scores by scaling up the inputs (scaling down the outputs) of a DMU under
evaluation. According to the equivalent standard DEA model, the SE score for an efficient unit
that lacks feasible solutions in the standard SE model is equal to the user-defined scaling factor.
Chen (2005)(Chen, 2005) suggests that the input-oriented model be used when the
output-oriented model is infeasible, and vice versa, however both the input-oriented and the
output-oriented SE models may simultaneously be infeasible for an efficient unit. Cook et al.
(2009)(Cook, Liang, Zha, & Zhu, 2009) developed a novel approach which can always get a
feasible solution for the SE-VRS model. However, it is proved in following section of this study
97
that the results yielded by applying Cook et al.’s formula are not flawless.
In this paper, on the basis of Cook et al. (2009)’s idea, we develop a DEA model with
generalized orientation to resolve the infeasibility problem in the SE-VRS model. In addition,
we discuss several special cases derived from the generalized model, among which there are
two cases that are equivalents of the traditional input-oriented and output-oriented models, and
two other cases (named as the modified input-oriented model and the modified output-oriented
model) that provide solutions to the problem of infeasibility. It is shown that the new approach
yields standard efficiency scores and SE scores that are identical to those determined by its
counterpart traditional models, and it also yields optimal solutions and scores for efficient
DMUs that are regarded as infeasible by the traditional models. This paper presents the new
approach for the SE-VRS model only, but it can also applied to SE-NIRS and SE-NDRS
models.
This paper unfolds as follows. In Section 2, we identify the problems associated with the
traditional SE-VRS models and analyze the properties of the new (general-oriented) model. In
Section 3 we provide the method of soling the new model. Section 4 provides a comparison
between the general-oriented model and Cook et al.’s approach. The new model is applied to a
real dataset as an illustrative example in Section 5. Finally, Section 6 concludes.
2. The new model with generalized orientation

2.1 Infeasibility for input-oriented SE-VRS model
The input-oriented VRS model for the evaluated DMUk can be formulated as(Banker,
Charnes, & Cooper, 1984):
min 
s.t.  x j ij
  xik , i  1, 2,..., m
j 1
 y j rj
 yrk , r  1, 2,..., s
j 1
 j
1
j 1
 j  0, j  1, 2, ..., n
(1)
For an efficient DMUk, the SE-VRS model is(Andersen & Petersen, 1993):
min 
98
n
s.t.  x j ij
  xik , i  1, 2,..., m
j 1
jk
 y j rj
 yrk , r  1, 2,..., s
j 1
jk
 j
1
j 1
jk
 j  0, j  1, 2,..., n ( j  k ) (2)
In the input-oriented SE-VRS model, infeasibility occurs when an efficient DMUk cannot reach
the frontier formed by the remaining DMUs through increasing inputs. Since the constraint for
inputs in (2) is always feasible, the necessary and sufficient condition for infeasibility is that the
n
constraint for outputs in (2) be infeasible, i.e.  y j rj

 yrk is infeasible.
j 1
j k
A sufficient but not necessary condition for infeasibility of the input-oriented SE-VRS models
is that there exists at least one output that has a value for the evaluated DMUk greater than the
values of any other DMUs.
n n n
Proof: If yrk  yrj ( j  1, 2,..., n; j  k ) , then  y   y j rj j rk

. With  j
 1 and
j 1 j 1 j 1
jk jk j k
n n n
  j yrk  yrk , then   j yrj  yrk always holds. As a result,  y j rj

 yrk is infeasible.
j 1 j 1 j 1
jk jk jk
2.2 Infeasibility for output-oriented SE-VRS model
The output-oriented VRS model can be formulated as:

max 
s.t .  x j ij
 xik , i  1, 2,..., m
j 1
 y j rj
  yrk , r  1, 2,..., s
j 1
99
n
 j
1
j 1
 j  0, j  1, 2, ..., n
(3)
For an efficient DMUk, the SE-VRS model is:

max 
s.t .  x j ij
 xik , i  1, 2,..., m
j 1
jk
 y j rj
  yrk , r  1, 2,..., s
j 1
j k
 j
1
j 1
jk
 j  0, j  1, 2,..., n ( j  k )
(4)
In the output-oriented SE-VRS model, infeasibility occurs when an efficient DMUk cannot
reach the frontier formed by the rest of the DMUs through decreasing outputs. Since the
constraint for outputs in (4) is always feasible, the necessary and sufficient condition for
n
infeasibility is that the constraint for inputs in (4) be infeasible, i.e.  x j ij

 xik is infeasible.
j 1
jk
A sufficient but not necessary condition for infeasibility of the output-oriented SE-VRS models
is that there exists at least one input that has a value for the evaluated DMUk smaller than the
values of any other DMUs.
n n
Proof: If xik  xij ( j  1, 2, ..., n; j  k ) , then  x   x

j ij j ik
. Respecting the constraints
j 1 j 1
jk jk
n n n n
  j  1 and   j xik  xik , then   j xij  xik always holds. As a result,  x j ij

 xik is
j 1 j 1 j 1 j 1
j k jk jk jk
infeasible.
2.3 Solutions for infeasibility of SE-VRS model
To make the infeasible cases be feasible, both input-increasing and output-decreasing

movements must be made for the efficient DMUk to reach the frontier. In order to tackle the
100
problem of infeasibility, a non-oriented model should be developed in which both
input-increasing and output-decreasing options are allowed for an efficient DMU to reach the
frontier constructed by the remaining sample DMUs.
In this context, consider the following model for DMUk:
1
min
1 
s.t.  x j ij
 (1   ) xik , (i  1, 2,..., m)
j 1
 y j rj
 (1   ) yrk , ( r  1, 2,..., s )
j 1
 j
1
j 1
 j  0, j  1, 2, ..., n
(5)
where both input-decreasing and output-increasing movements are permitted for an inefficient
DMU to reach the frontier, and the efficiency score is defined as (1-α*)/(1+β*), with the
numerator (1-α*) indicating the degree of input shrinkage and the denominator (1+β*) denoting
the output expansion.
If DMUk is efficient in model (5), its SE model is expressed as:
1
min
1 
s.t.  x j ij
 (1   ) xik , (i  1, 2,..., m)
j 1
jk
 y j rj
 (1   ) yrk , ( r  1, 2,..., s )
j 1
jk
 j
1
j 1
jk
  0,   0,  j  0, j  1, 2, ..., n ( j  k )
(6)
101
where both input increasing (α ≤ 0) and output decreasing (β ≤ 0) are allowed for an efficient
DMU to reach the frontier formed by the rest of the DMUs, and the SE score is defined as the
ratio: (1-α*)/(1+β*), in which the numerator (1-α*) indicates the degree of input expansion and
the denominator (1+β*) indicates the output shrinkage.
In model (6), it is possible that an efficient DMU increases its inputs and decreases its outputs
simultaneously to reach the frontier determined by the rest of the DMUs. Consequently, model
(6) is always feasible.
Proof: Acknowledging the constraint α≤0 ，  x j ij

 (1   ) xik is always feasible, and
j 1
jk
respecting the constraint β≤0,  y j rj

 (1   ) yrk is always feasible as well. As a result,
j 1
jk
model (6) is always feasible.
Now we extend models (1), (3) and (5) to a generalized form, for DMUk
1 w 
I
min
1 w 
O
s.t .  x j ij
 (1  f ( w ) *  ) xik , i  1, 2,..., m
I
j 1
 y j rj
 (1  f ( w ) *  ) yrk , r  1, 2,..., s
O
j 1
 j
1
j 1
 j  0, j  1, 2, ..., n
wI +wO  0
 0, if w  0 
f ( w)    (7)
 1, if w  0 
where w I and wO are user-defined non-negative numbers, with at least one of them being
positive. The superscripts I and O denote that the user-defined values are attached to the
input-orientation or the output-orientation respectively. The efficiency score is defined by the
ratio: (1-α)/(1+β).
102
If DMUk is efficient in model (7), its generalized SE-VRS model is expressed as:
1 w 
I
min
1 w 
O
s.t.  x j ij
 (1  f ( w ) *  ) xik , i  1, 2,..., m
I
j 1
j k
 y j rj
 (1  f ( w
O
) *  ) yrk , r  1, 2,..., s
j 1
jk
 j
1
j 1
jk
  0,   0,  j  0, j  1, 2,..., n ( j  k )
wI +wO  0
 0, if w  0 
f ( w)   
 1, if w  0  (8)
where the denotations are the same as those in model (7).
In model (7) and model (8), w I and wO denote the priority of the orientation. The generalized
SE model (8) is always feasible when both w I and wO have non-zero values. The proof of the
feasibility statement for model (8) is based on the proof of universal feasibility for model (6).
Table 1 lists seven special cases of the generalized model and their definitions for (super-)
efficiency score. Case 1 is the equivalent of the traditional input-oriented model, and case 2 is
the modified input-oriented model which overcomes the problem of infeasibility while keeping
input-orientation. Case 3 is the equivalent of the traditional output-oriented model, and case 4 is
the modified output-oriented model which overcomes the problem of infeasibility while
keeping output-orientation. Case 5 to case 7 are non-orientated models. The aim of this paper is
to address the infeasibility of SE-VRS models acknowledging that non-oriented SE-VRS
models do not experience infeasibility problem. In this context, we explain only cases 1 to 4 in
detail.
Case 1: The generalized model is equivalent to the traditional input-oriented model, and the
(super-) efficiency score 1 – α* in the generalized model is equal to θ* in the traditional
input-oriented model.
103
Proof: In case 1, w I  1 and wO  0 , the standard efficiency model can be expressed as:
min (1   )
s.t.  x j ij
 (1   ) xik , i  1, 2,..., m
j 1
 y j rj
 yrk , r  1, 2,..., s
j 1
 j
1
j 1
 j  0, j  1, 2, ..., n
(9)
If (1-α) is replaced by θ, model (9) becomes the traditional input-oriented VRS model (1).
In case 1, the SE-VRS model can be written as:
min (1   )
s.t.  x j ij
 (1   ) xik , i  1, 2,..., m
j 1
jk
 y j rj
 yrk , r  1, 2,..., s
j 1
jk
 j
1
j 1
jk
  0,   0,  j  0, j  1, 2,..., n (j  k )
(10)
If (1-α) is replaced by θ, model (10) becomes the traditional input-oriented SE-VRS model (2).
Case 2: Input-orientation is given priority with output-orientation retained. This means that the
output deceasing movement is allowed for the evaluated DMUk to reach the frontier formed by
the rest of the DMUs, but such a decrease should be minimized. The (super-) efficiency score is
defined as (1 – α*) omitting the denominator (1 + β*), which means that the efficiency score is
measured by movements of inputs only. Case 2 expresses a modified input-orientation with the
following properties:
1) the standard efficiency score (1 – α*) is equal to θ* in the traditional input-oriented model;
104
2) the SE score is equal to θ* in the traditional input-oriented SE-VRS model when the
traditional input-oriented SE-VRS model is feasible; and
3) when the traditional input-oriented SE model is infeasible, this modified input-oriented

model will still yield an optimal solution.
These properties justify that the modified input-oriented model overcomes the problem of
infeasibility while keeping the consistency with the traditional input-oriented model.
Proof: In case 2, the VRS model is written as:
1
min
1  
s.t.  x j ij
 (1   ) xik , i  1, 2,..., m
j 1
 y j rj
 (1   ) yrk , r  1, 2,..., s
j 1
 j
1
j 1
 j  0, j  1, 2, ..., n
(11)
In model (11), the objective function is minimizing (1-α) and maximizing (1+εβ). In its
solutions, a larger β will result in a smaller α. Increasing β makes essentially no contribution to
the reduction of the objective function, because of the effect of the coefficient ε
(Non-Archimedean infinitesimal), so β will be minimized to zero in the optimal solution. When
this occurs, model (11) is equivalent to the traditional input-oriented VRS model and property
1 is proven.
In case 2, the SE-VRS model can be expressed as:
1  
min
1 
s.t.  x j ij
 (1   ) xik , i  1, 2,..., m
j 1
jk
 y j rj
 (1   ) yrk , r  1, 2,..., s
j 1
j k
105
n
 j
1
j 1
jk
  0,   0,  j  0, j  1, 2, ..., n ( j  k )
(12)
In model (12), the objective function is to minimize (1-εα) and to maximize (1+β). In its
solutions, both α and β have non-positive values, and the larger the absolute value of β, the
smaller the absolute value of α. An increase in the absolute value of β will result in an increase
in the objective function, but an increase in the absolute value of α will not result in an increase
in the objective function because of the effect of the coefficient ε (Non-Archimedean
infinitesimal). So, the absolute value of β will be minimized to zero in the optimal solution if
β=0 is a solution. If β=0, model (12) can be formulated as:
min 1  
s.t.  x j ij
 (1   ) xik , i  1, 2,..., m
j 1
jk
 y j rj
 yrk , r  1, 2,..., s
j 1
jk
 j
1
j 1
jk
  0,   0,  j  0, j  1, 2, ..., n ( j  k )
(13)
Because ε is a small positive number, the optimal solution will not change after the replacement
of the objective function with “min (1-α)”. After replacement, the model is equivalent to the
traditional input-oriented SE-VRS model. If β=0 is a solution value in model (12), the
traditional input-oriented SE-VRS model is feasible. Then, property 2 is proved.
When the traditional input-oriented SE-VRS model is infeasible, it means that β cannot be 0 in
model (12). In such cases, model (12) still can yield an optimal solution in which the absolute
value of β is minimized. Property 3 is proved.
Case 3: The generalized model is equivalent to the traditional output-oriented model, and the
(super-) efficiency score 1/(1 + β*) in the generalized model is equal to 1/φ* in the traditional
output-oriented model. This can be proved as case 1.
Case 4: Output-orientation is given priority while input-orientation is retained. This property

means that the input increasing movement is allowed for the evaluated DMUk to reach the
frontier constructed by the remaining DMUs, but such a movement must be minimized. The
(super-) efficiency score is defined as 1/(1 + β*) omitting the numerator (1 +α*), which means
that the efficiency score is measured by the movements of outputs only. This is a modified
106
output-orientated model with the following properties:
1) the standard efficiency score, 1/(1 + β*), is equal to 1/φ* in the traditional output-oriented
model;
2) the SE score is equal to 1/φ* in the traditional output-oriented SE-VRS model as well when
it is feasible; and
3) when the traditional output-oriented SE-VRS model is infeasible, this modified

output-oriented model will still yield an optimal solution.
These properties can be proved by the same procedure that was used in case 2. They mean that
the modified output-oriented model overcomes the problem of infeasibility, and, at the same
time, it keeps the consistency with the traditional output-oriented model.
3. Solving the new models
Although, to deal with infeasibility, in the new approach (case 2 and case 4) both output
decrease and input increase are permitted for the evaluated efficient DMU to reach the frontier
formed by the other DMUs, the objective function requires that the output decrease be
minimized in the modified input-oriented SE-VRS model (case 2), and the input increase be
minimized in the output-oriented SE-VRS model (case 4). To achieve such an idea, the
non-Archimedean infinitesimal is used in the programming. In practice, a small positive
number, for example 10-5, can be used instead of ε, and then the model can be solved by
non-linear programing.
The new models can also be resolved through a two-stage method as follows. To be more
precise, by taking the SE-VRS programming for case 2, i.e. model (12), as an example, at stage
1, the first programming is resolved to get a minimum absolute value of β, namely maximal
non-positive solution β*,:
max 
s.t.  y j rj
 (1   ) yrk , r  1, 2,..., s
j 1
jk
 j
1
j 1
jk
  0,  j  0, j  1, 2, ..., n ( j  k )
(14)
And at stage 2, a second programming is solved to get a minimum absolute value of α, namely
maximal non-positive solution α*,
max 
107
n
s.t.  x j ij
 (1   ) xik , i  1, 2,..., m
j 1
jk
 y j rj
 (1   ) yrk , r  1, 2,..., s
*
j 1
jk
 j
1
j 1
jk
  0,  j  0, j  1, 2, ..., n ( j  k )
(15)
The two-stage method has two advantages i.e. 1) it can avoid numerical error caused by
approximation of the non-Archimedean infinitesimal, and 2) the problems in both stages relate
to linear programming, hence the transformation is not needed.
4. Comparison of our approach with the approach proposed by Cook et al. (2009)
Cook et al. (2009) proposed an approach to deal with the problem of infeasibility of the
SE-VRS. Model (16) describes the concept of the approach put forth by Cook et al. to deal with
infeasibility yielded by the input-oriented SE-VRS model.
Consider the following model for an efficient DMUk:
min     
s.t .  x j ij
 (1   ) xik , i  1, 2,..., m
j 1
jk
 y j rj
 (1   ) yrk , r  1, 2,..., s
j 1
j k
 j
1
j 1
jk
  0,  j  0, j  1, 2, ..., n ( j  k )
(16)
where M is a user-defined large positive number, and the SE score is defined by Cook et al. as:
1+τ*+1/(1-β*). Model (16) is always feasible. The proof of this statement relies on the steps
followed in model (6) for proving its feasibility. Regardless of the feasibility of model (16), two
defects have been identified:
Defect 1: The definition of SE score 1+τ*+1/(1-β*) may result in contradictions.

108
Let’s discuss two special instances first.
Instance 1: τ*=β*=0
In model (17), τ indicates SE attributed to input increase, and β indicates SE attributed to output
decrease. If both τ and β are zeros, which indicates that neither inputs nor outputs show SE, the
super-efficiency score should be equal to 1. Obviously, the super-efficiency score calculated by
applying the definition: 1+τ*+1/(1-β*) is not equal to 1 in the case of τ*=β*=0, which
contradicts the above statement. Such a case can be easily constructed by adding a DMU to the
sample that has exactly the same input and output values as the evaluated efficient DMUk.
Instance 2: τ*>0 and β*=0
If τ* is a positive number and β* is zero, there must be a feasible optimal solution yielded by the
traditional SE model (according to theorem 1 in Cook et al.’s paper), and the SE score
calculated with the new model should be equal to that calculated with the traditional SE model,
just as stated in Cook et al.’s paper. However, the super-efficiency score in this case calculated
with (17) is 1+τ*+1/(1-β*)=1+τ*+1. It should be noted that 1 + τ* is the SE score in the
traditional SE model (i.e. θ*). This paradox should have been uncovered by the comparison of
the SE scores associated with feasible DMUs calculated using the two models. However, the SE
scores cited in Cook et al.’s paper were calculated with the traditional model rather than with
the new model, so the flaw that was previously pointed out failed to become explicit.
Even if the definition of SE score, i.e. 1+τ*+1/(1-β*), is used solely when the standard SE-VRS
model is infeasible, it still can produce unreasonable results. Namely, let both τ* and β* to be
very small numbers, slightly greater than 0; for example, τ*=0.0104 and β*= 0.0057 (this case
can be found in Table 3 of Cook et al.’s paper). Since τ and β indicate the input “super part” and
the output “super part”, respectively, and since both “super parts” are small enough, it is
obvious that the calculated SE score should be slightly greater than 1. Nevertheless, the SE
score determined by the definition formula put forth by Cook et al. is equal to:
1+0.0104+1/(1-0.0057) = 2.0161, which is a much larger number than was expected.
Furthermore, we elaborate on an extreme example by assuming that τ*=0.00000001 and β*=
0.00000001. In solving the problem, if both τ and β are rounded to zero, the SE score should be
equal to 1, but the calculated score based on the definition formula by Cook et al. is 2.
In fact, the relationship between the two components in the model for the determination of the
SE score should be multiplicative, not additive. In other words, the SE score should be defined
as: (1 + τ*)/(1 - β*). By applying this definition the aforementioned inconsistencies disappear.
Defect 2: In model (17), both τ and β should have positive values.
Since DMUk is an efficient unit, and τ indicates the input increase needed for DMUk to reach the
n n
frontier, τ must be a non-negative value. If τ<0, there will exist   j xij    j xij  (1   ) xik ,
j 1 j 1
jk
which contradicts the precondition that DMUk is an efficient unit. Therefore, τ > 0 must be
added to model (17) as a constraint. Using the multiplicative definition (1 + τ*)/(1 - β*), if the
constraint τ > 0 is omitted, the SE score of an efficient DMU may be less than 1.
109
Similar defects exist in Cook et al.’s approach for output-oriented SE-VRS models.
The essence of Cook et al.’s approach for dealing with infeasibility was that output decrease is
permitted but must be minimized for the evaluated DMUk to reach the frontier formed by the
rest of the DMUs involved in the input-oriented SE-VRS model.
The model that we developed, described in this paper, mainly uses Cook et al.’s idea for dealing
with infeasibility, and we introduced some modifications in order to overcome the drawbacks
associated with Cook et al.’s approach. Cases 6 and 7 in Table 1 are equivalent to Cook et al.’s
approach for input- and output-oriented SE-VRS models, respectively, provided that the
previously discussed defects are rectified. We recommend that case 2 be used for infeasibility in
the input-oriented SE-VRS model, because the efficiency measure doesn’t incorporate output
decrease, which is in accordance with the meaning of input-orientation; and, for the same
reason, case 4 should be used for infeasibility in the output-oriented SE-VRS model.
5. Illustrative example
We apply the modified input-oriented model and the input-prioritized non-oriented model (case
2 and case 6) to a real dataset as an illustrative example. Case 2 and case 6 have same objective
functions, but different definitions of efficiency score. The objective functions, efficiency
definitions, and WI and WO factors for the two cases are listed in Table 1. In essence, case 2 is
input-oriented, and case 6 is non-oriented.
A real dataset from 20 hospitals in China for the year 2010 is used as an example (Table 2). The
dataset consists of two inputs (number of doctors and number of nurses) and two outputs
(number of outpatient visits and number of inpatient admissions). The number of outpatient
visits of Hospital L is greater than that of any other hospital, and the number of inpatient
admissions of Hospital S is greater than that of the other sample hospitals. According to the
sufficient condition for infeasibility, the input-oriented SE-VRS model will be infeasible for
Hospital L and Hospital S.
Table 3 compares the results from the traditional input-oriented models with those from the
modified input-oriented model (case 2) and the input-prioritized non-oriented model (case 6).
Although Hospital A has neither the largest number of outpatient visits nor the largest number
of inpatient admissions, it still has a problem of infeasibility when the input-oriented SE-VRS
model is applied. This illustrates that the case of one output of a sample DMU being greater
than that of the remaining DMUs is not a necessary condition for infeasibility. The efficiency
component 1 - α* in the new models is equal to θ* in the traditional input-oriented model. Both
the modified input-oriented model (case 2) and the input-prioritized non-oriented model (case 6)
yield SE scores for Hospitals A, L and S, which are infeasible when the traditional
input-oriented SE-VRS model is applied. Additionally, both of the two new models yield SE
values equal to those of the traditional input-oriented SE-VRS model for Hospitals B, C, G, K,
N, and P, which are feasible under the traditional model. Note that in the standard efficiency
model, unlike the modified input-oriented model (case 2) that always yields the same efficiency
scores as those calculated by the traditional input-oriented model, the input-prioritized
non-oriented model (case 6) presents some inconsistencies when compared to the results of the
110
traditional input-oriented model (see efficiency scores of Hospitals H, I, Q and R). Therefore,
the modified input-oriented VRS model (case 2) keeps the complete consistency with the
traditional input-oriented model, so it is suggested that the modified input-oriented VRS model
(case 2) should be applied to address the infeasibility problem in the input-oriented SE-VRS
model.
6. Conclusions
Based on the necessary and sufficient conditions for the infeasibility issue of SE-VRS model
and the idea of Cook et al. (2009) for dealing with the infeasibility problem, in the current paper,
we develop a DEA model with generalized orientation to overcome infeasibility problems in
the SE-VRS models. Among the special cases of the generalized model, two cases, named as
the modified input-oriented model (case 2) and the modified output-oriented model (case 4),
overcome the infeasibility problem in SE-VRS models, while keeping the complete consistency
with the traditional input-oriented model and the traditional output-oriented model, respectively.
This approach can be extended from VRS to NIRS and NDRS.
111
Table 1 Special cases of the standard and the generalized super-efficiency models and their definitions for computing
efficiency scores
Case Model Standard efficiency model Super-efficiency model
wI wO Objective Efficiency wI wO Objective Efficienc
Function Score Function y Score
1 Input-oriented 1 0 1 1 *
1 0 1 1 *
1 1  
2 Input-oriented (modified) 1 ε 1 * ε 1 1 *
1   1 
1 1 1 1
3 Output-oriented 0 1 0 1
1  1  * 1  1  *
1   1 1 1
4 Output-oriented (modified) ε 1 1 ε
1  1  * 1   1  *
1 1 * 1 1 *

5 Non-oriented 1 1 1 1
1  1  * 1  1  *
1 1 * 1   1 *

6 Non-oriented (input-prioritized) 1 ε ε 1
1   1  * 1  1  *
1   1 * 1 1 *

7 Non-oriented (output-prioritized) ε 1 1 ε
1  1  * 1   1  *
ε is the non-Archimedean infinitesimal.
Table 2 Data from 20 hospitals in China in 2010

Hospital Doctor Nurse Outpatient Inpatient
A 887 1090 1683441 59423
B 277 252 556126 39967
C 326 475 1001634 19712
D 504 524 953445 15142
E 365 543 809861 18665
F 312 469 276522 19910
G 358 340 837199 19624
H 329 329 408298 28140
I 404 260 175363 18269
J 423 1021 581887 29626
K 226 349 606911 17823
L 811 1136 1892727 30132
M 310 576 383334 17396
N 745 1147 1462558 56906
O 473 580 896914 36645
P 209 327 497666 16271
Q 365 327 320467 26920
R 472 427 354200 25571
S 779 1208 939097 69922
T 497 683 538589 38788
112
Table 3 Comparison of results yielded by the traditional SE-VRS model and the new models
Traditional
New models
SE-VRS
Case 2 Case 6
Hospital θ* α* β*
Efficiency Efficiency
A Infeasible -0.051 -0.099 1.051 1.167
B 2.293 -1.293 0.000 2.293 2.293
C 1.244 -0.244 0.000 1.244 1.244
D 0.816 0.184 0.000 0.816 0.816
E 0.761 0.239 0.000 0.761 0.761
F 0.703 0.297 0.000 0.703 0.703
G 1.155 -0.155 0.000 1.155 1.155
H 0.806 0.194 0.273 0.806 0.633
I 0.969 0.031 1.188 0.969 0.443
J 0.600 0.400 0.000 0.600 0.600
K 1.045 -0.045 0.000 1.045 1.045
L Infeasible -0.094 -0.111 1.094 1.230
M 0.685 0.315 0.000 0.685 0.685
N 1.052 -0.052 0.000 1.052 1.052
O 0.837 0.163 0.000 0.837 0.837
P 1.081 -0.081 0.000 1.081 1.081
Q 0.771 0.229 0.485 0.771 0.519
R 0.590 0.410 0.563 0.590 0.378
S Infeasible -0.139 -0.150 1.139 1.340
T 0.551 0.449 0.000 0.551 0.551
113
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Features of MaxDEA Pro .................................................................................. 1

DEA Models available in MaxDEA Pro ........................................................... 3

2 A Quick Guide ........................................................................................6

System Requirements ........................................................................................ 6

Prepare Data ....................................................................................................... 7

Data format .................................................................................................... 7

DMU Name .................................................................................................... 8

Panel Data ...................................................................................................... 8

Negative Data ..................................................................................................... 9

Import and Define Data................................................................................... 10

Run Model ........................................................................................................ 11

3 Envelopment DEA model ....................................................................12

Distance (method of measuring efficiency) .................................................... 12

Maximum distance to frontier: SBM ........................................................... 12

Modified SBM ............................................................................................. 13

Minimum distance to weak efficient frontier ............................................... 13

Minimum distance to strong efficient frontier ............................................. 13

Directional Distance Function ..................................................................... 13

Hybrid distance(Radial and SBM fields) ..................................................... 17

Cost, Revenue, Profit, and Revenue/Cost Ratio Models ............................. 17

Returns to scale (RTS) ..................................................................................... 19

CCR model ....................................................................................................... 20

BCC model ........................................................................................................ 20

SBM model ....................................................................................................... 20

Modified SBM .................................................................................................. 21

FDH Model ....................................................................................................... 21

Advanced models ............................................................................................. 22

Super-efficiency model .................................................................................... 22

Range Directional model (RDM) .................................................................... 23

Window Model ................................................................................................. 23

Non-controllable Inputs/outputs Model ......................................................... 23

Measure Specific Model .................................................................................. 24

Restricted Projection Model ........................................................................... 24

Nondiscretionary Inputs/outputs Model ........................................................ 24

Bounded Inputs/outputs Model ...................................................................... 25

Undesirable Outputs Model ............................................................................ 25

Inseparable Good and Bad Outputs Model .................................................. 26

Weak Disposability Model............................................................................... 27

Context–dependent model ............................................................................... 28

Cost, Revenue, Profit, and Revenue/Cost Ratio Model ................................ 28

Cluster Model ................................................................................................... 28

Data format for Cluster Model ..................................................................... 29

Variable-benchmark Model ............................................................................ 39

Customized Benchmarking ............................................................................. 39

Network DEA Model........................................................................................ 40

Dynamic Model ................................................................................................ 45

Results for Envelopment Model...................................................................... 48

Scale Efficiency ........................................................................................... 48

Allocative Efficiency ................................................................................... 48

Input Inefficiency ......................................................................................... 48

Input Radial Inefficiency (for Hybrid model) .............................................. 49

Output Inefficiency ...................................................................................... 49

Output Radial Inefficiency(for Hybrid model) ............................................ 49

Output Non-radial Inefficiency(for Hybrid model) ..................................... 49

Benchmark (λ) ............................................................................................. 49

Times as a benchmark for another DMU ..................................................... 49

RTS Estimation ............................................................................................ 50

Proportionate Movement (Radial Movement) ............................................. 50

Slack Movement .......................................................................................... 50

RHS Lower Bound and RHS Upper Bound ................................................ 50