European Journal of Operational Research 130 (2001) 498±509

www.elsevier.com/locate/dsw

Theory and Methodology

A slacks-based measure of eciency in data envelopment analysis

Kaoru Tone
National Graduate Institute for Policy Studies, 2-2 Wakamatsu-cho, Shinjuku-ku, Tokyo 162-8677, Japan
Accepted 1 July 1999

Abstract

In this paper, we will propose a slacks-based measure (SBM) of eciency in Data Envelopment Analysis (DEA).
This scalar measure deals directly with the input excesses and the output shortfalls of the decision making unit (DMU)
concerned. It is units invariant and monotone decreasing with respect to input excess and output shortfall. Further-
more, this measure is determined only by consulting the reference-set of the DMU and is not a€ected by statistics over
the whole data set. The new measure has a close connection with other measures proposed so far, e.g., Charnes±
Cooper±Rhodes (CCR), Banker±Charnes±Cooper (BCC) and the Russell measure of eciency. The dual side of this
model can be interpreted as pro®t maximization, in contrast to the ratio maximization of the CCR model. Numerical
experiments show its validity as an eciency measurement tool and its compatibility with other measures of ecien-
cy. Ó 2001 Elsevier Science B.V. All rights reserved.

Keywords: DEA; Eciency; Slacks; Pro®t; Units invariant; Russell measure

1. Introduction puts and outputs in an attempt to gauge the rela-

Since the innovative work by Charnes et al.
(1978), studies in Data Envelopment Analysis
(DEA) have been extensive: more than 1000 pa-
pers by 1996. One of the main objectives of DEA is
to measure the eciency of a Decision Making
Unit (DMU) by a scalar measure ranging between
zero (the worst) and one (the best). This scalar
value is measured through a linear programming
model. Speci®cally, the Charnes±Cooper±Rhodes
(CCR) model deals with the ratio of multiple in-
E-mail address: tone@grips.ac.jp (K. Tone).
tive eciency of the DMU concerned among all
the DMUs. This fractional program is solved by
transforming it into an equivalent linear program
using the Charnes±Cooper transformation. The
optimal objective value (h ) is called the ratio (or
radial) eciency of the DMU. The optimal solu-
tion reveals, at the same time, the existence, if any,
of excesses in inputs and shortfalls in outputs
(called slacks). A DMU with the full ratio e-
ciency, h ˆ 1, and with no slacks in any optimal
solution is called CCR-ecient. Otherwise, the
DMU has a disadvantage against the DMUs in
its reference-set. Therefore, in discussing total
eciency, it is important to observe both the ratio

0377-2217/01/$ - see front matter Ó 2001 Elsevier Science B.V. All rights reserved.
PII: S 0 3 7 7 - 2 2 1 7 ( 9 9 ) 0 0 4 0 7 - 5
 K. Tone / European Journal of Operational Research 130 (2001) 498±509
eciency and the slacks. Some attempts have been
made to unify h and slacks into a scalar measure,
see Tone (1993) and Pastor (1995) among others.
Meanwhile, Charnes et al. (1985) developed the
additive model of DEA, which deals directly with
input excesses and output shortfalls. This model
has no scalar measure (ratio eciency) per se.
Although this model can discriminate between ef-
®cient and inecient DMUs by the existence of
slacks, it has no means of gauging the depth of
ineciency, similar to h in the CCR model. In an
attempt to de®ne ineciency based on the slacks,
Russell (1985, 1988), Pastor (1996), Lovell and
Pastor (1995), Torgersen et al. (1996), Cooper and
Pastor (1997), Cooper and Tone (1997), Thrall
(1997) and others have proposed several formulae
for ®nding a scalar measure. The following prop-
erties are considered as important in designing the
measures.
· (P1) Units invariant: The measure should be in-
variant with respect to the units of data.
· (P2) Monotone: The measure should be mono-
tone decreasing in each slack in input and out-
put.
· (P3) Translation invariant: The measure should
be invariant under parallel translation of the co-
ordinate system applied (Ali and Seiford, 1990;
Pastor, 1996).
In this paper, we further emphasize the original
property of DEA:
· (P4) Reference-set dependent: The measure
should be determined only by consulting the ref-
erence-set of the DMU concerned.
Given that DEA employs piece-wise linear ecient
frontiers which are spanned by ecient DMUs,
and that an inecient unit is `inecient' with re-
spect to DMUs in its reference-set, the measure of
eciency should be determined by the reference-
set dependent values, as in the CCR and BCC
(Banker et al., 1984) models. It should not be in-
¯uenced by the extreme values, e.g., the minimum
and the maximum of the data set, or by statistics
covering the whole data set.
The new measure proposed in this paper satis-
®es the properties (P1), (P2) and (P4).
The rest of the paper is organized as follows.
Section 2 proposes a new measure of eciency
(SBM) based on input excesses and output short-
499
falls, along with the computational scheme for
solving the fractional program that de®nes SBM.
We will show that the SBM can be interpreted as a
product of input and output ineciencies. The
relationship with the CCR model is described in
Section 3. The dual side of the SBM model is
presented in Section 4, where it is shown that the
model maximizes the virtual pro®t instead of the
virtual ratio of the CCR model. This enables us to
introduce economic aspects into the SBM: we can
embed information on costs and prices into it.
Furthermore, by restricting the feasible region of
the dual variables (virtual costs and prices), we can
make interpretations which are close to reality,
similar to those using the assurance region method
of Thompson et al. (1986) for the radial type
models, e.g. the CCR and the BCC. In Section 5,
an illustrative example is exhibited which com-
pares the SBM with other CCR-type models. In
Section 6, we will relax the positivity assumption
of the data set. Finally, in Section 7, comparisons
between the SBM and the Russell graph measure
of technical eciency (Russell, 1988; Fare et al.,
1978, 1985) will be discussed from technical and
economic viewpoints.
2. A slacks-based measure of eciency
The de®nition of a slacks-based measure (SBM)
of eciency will be given, along with its interpre-
tation as a product of input and output ine-
ciencies.
2.1. De®nition and computational scheme of SBM
We will deal with n DMUs with the input and
output matrices X ˆ xij † 2 Rmn and Y ˆ yij † 2
Rsn , respectively. We assume that the data set is
positive, i.e. X > 0 and Y > 0. (This assumption
will be relaxed in Section 6.)
The production possibility set P is de®ned as
P ˆ f x; y† j x P X k; y 6 Y k; k P 0g; 1†
n
where k is a nonnegative vector in RP . (We can
n
impose some constraints on k, such as jˆ1 kj ˆ 1
500 K. Tone / European Journal of Operational Research 130 (2001) 498±509

Pm
(the BCC model), if it is needed to modify the minimize s ˆ t m1 P iˆ1 tsi =xio
s
production possibility set.) subject to 1 ˆ t ‡ 1s rˆ1 ts‡
r =yro ;
We consider an expression for describing a xo ˆ X k ‡ s ;
certain DMU xo ; yo † as yo ˆ Y k s‡ ;
k P 0; s P 0; s‡ P 0; t > 0:
xo ˆ X k ‡ s ; 2†
8†
yo ˆ Y k s ‡ ; 3†
The problem given above is a nonlinear pro-
with k P 0; s P 0 and s‡ P 0. The vectors gramming problem since it contains the nonlinear
s 2 Rm and s‡ 2 Rs indicate the input excess and term ts‡r r ˆ 1; . . . ; s†. However we can transform
output shortfall of this expression, respectively, it into a linear program as follows. Let us de®ne
and are called slacks. From the conditions X > 0
and k P 0, it holds S ˆ ts ; S ‡ ˆ ts‡ and K ˆ tk:

xo P s : 4† Then, [SBMt] becomes the following linear pro-

gram in t; S ; S ‡ and K:
Using s and s‡ , we de®ne an index q as follows: [LP]
P Pm
1 1=m† miˆ1 si =xio minimize s ˆ t m1 iˆ1 Si =xio
qˆ Ps ‡ : 5† Ps
1 ‡ 1=s† rˆ1 sr =yro subject to 1 ˆ t ‡ 1s rˆ1 Sr‡ =yro ;
txo ˆ X K ‡ S ;
It can be veri®ed that q satis®es the properties (P1)
tyo ˆ Y K S ‡ ;
(units invariant) and (P2) (monotone). Further-
more, from (4), it holds K P 0; S P 0; S ‡ P 0; t > 0:
9†
0 < q 6 1: 6†
Let an optimal solution of [LP] be
In an e€ort to estimate the eciency of xo ; yo †, we
formulate the following fractional program in s ; t ; K ; S  ; S ‡ †:
k; s and s‡ . Then, we have an optimal solution of [SBM] as
[SBM] de®ned by
Pm
1 1=m† s =x q ˆ s ; k ˆ K =t ; s 
ˆ S  =t ;
minimize qˆ Psiˆ1 ‡i io
1‡ 1=s† s
rˆ1 r
=yro s‡ ˆ S ‡ =t : 10†
subject to xo ˆ X k ‡ s ; 7†
yo ˆ Y k s ‡ ; Based on this optimal solution, we determine a
k P 0; s P 0; s‡ P 0: DMU as being SBM-ecient as follows:

[SBM] can be transformed into a linear program De®nition 1 (SBM-efficient). A DMU xo ; yo † is

using the Charnes±Cooper transformation in the SBM-ecient if q ˆ 1.
similar way as the CCR model. (See Charnes and
Cooper, 1962; Charnes et al., 1978.) This condition is equivalent to s  ˆ 0 and
Let us multiply a scalar variable t > 0† to both ‡
s ˆ 0, i.e., no input excesses and no output
the denominator and the numerator of (7). This shortfalls in any optimal solution.
causes no change in q. We adjust t so that the For an SBM inecient DMU xo ; yo †, we have
denominator becomes 1. Then this term is moved the expression:
to constraints. The objective is to minimize the
numerator. Thus, we have xo ˆ X k ‡ s  ;
[SBMt] yo ˆ Y k s‡ :
 K. Tone / European Journal of Operational Research 130 (2001) 498±509 501

The DMU xo ; yo † can be improved and be- the mean reduction rate of inputs or input ine-
come ecient by deleting the input excess and ciency. Similarly, in the second term, the ratio
augmenting the output shortfall as follows: yro ‡ s‡
r †=yro evaluatesPthe relative expansion rate
of output r and 1=s† yro ‡ s‡
r †=yro is the mean
xo xo s  ; 11† expansion rate of outputs. Its inverse, the second
yo yo ‡ s‡ : 12† term measures output ineciency. Thus, SBM q
can be interpreted as the product of input and
This operation is called the SBM-projection. output ineciencies.
Based on k , we de®ne the reference-set to
xo ; yo † as follows:
2.3. Imposing bounds on the slacks
De®nition 2 (Reference-set). The set of indices
corresponding to positive kj s is called the refer- The projection formulas (11) and (12) may re-
ence-set to xo ; yo †. sult in a large reduction (enlargement) in inputs
(outputs) of the DMU (xo ; yo ), which may not be
In the occurrence of multiple optimal solutions, allowed in the actual situations. In order to avoid
the reference-set is not unique. We can choose any such a diculty, we can impose bounds on the
one for our purpose. slacks s and s‡ , such as
The reference-set Ro is
s 6 so B and s‡ 6 s‡B
o ; 16†
Ro ˆ fj j kj > 0g j 2 f1; . . . ; ng†: 13†
where the vector so B s‡B
o † is the upper bound of
Using Ro , we can express xo ; yo † by input reduction (output enlargement) of the DMU
X and should be speci®ed for each DMU. Restricting
xo ˆ xj kj ‡ s  ; 14† the feasible region of slacks in this manner will
j2Ro
X give the eciency measure a score not less than the
yo ˆ yj kj s‡ : 15† original SBM score q .
j2Ro

Since the SBM q depends only on s  and s‡ , i.e.,

3. Relationship with the CCR model
the reference-set dependent values, q is not a€ected
by values attributed to other DMUs not in the
In this section, we will demonstrate that the
reference-set. In this sense, q proposed in this pa-
SBM q is not greater than the CCR eciency
per is di€erent from other eciency measures which
measure (h ) and that a DMU is SBM-ecient if
incorporate statistics over the whole data set.
and only if it is CCR-ecient.

2.2. Interpretation of SBM as product of input and

3.1. SBM and the CCR measure
output ineciencies
The (input-oriented) CCR model can be for-
The formula for q in (5) can be transformed
mulated as follows:
into
! ! 1 [CCR]
1 Xm
xio si 1X s
yro ‡ s‡
r
qˆ : minimize h
m iˆ1 xio s rˆ1 yro
subject to hxo ˆ X l ‡ t ; 17†
In the ®rst term on the right-hand side, the ratio
yo ˆ Y l t‡ ; 18†
xio si †=xio evaluates the relative reduction rate
‡
of input i and hence the ®rst term corresponds to l P 0; t P 0; t P 0:
502 K. Tone / European Journal of Operational Research 130 (2001) 498±509

De®nition 3 (CCR-efficient). A DMU xo ; yo † is Conversely, for an optimal solution q ; k ;

CCR-ecient, if the optimal objective value h is s ; s‡ † of [SBM], let us transform the constraints


equal to one and the optimal slacks t  and t‡ are as

zero for every optimal solution of [CCR].
hxo ˆ X k ‡ h 1†xo ‡ s  ; 26†
 ‡
For an inecient DMU xo ; yo †, the CCR pro- yo ˆ Y k s : 27†
jection is de®ned as
Further, we add the constraint
xo ( h xo t  ; 19† h 1†xo ‡ s 
P 0: 28†
yo ( yo ‡ t‡ : Then, (h; l ˆ k ; t ˆ h   ‡ ‡
1†xo ‡ s ; t ˆ s ) is
feasible for [CCR].
Let an optimal solution of [CCR] be
h ; l ; t  ; t‡ †. From (17), it holds
3.2. SBM-eciency and CCR-eciency
xo ˆ X l ‡ t  ‡ 1 h †xo ; 20†
yo ˆ Y l t‡ : 21† The relationship between CCR-eciency and
SBM-eciency is demonstrated by the following
Let us de®ne
theorem.
k ˆ l ; 22†
 Theorem 2. A DMU xo ; yo † is CCR-efficient, if
s ˆt ‡ 1 h †xo ; 23†
and only if it is SBM-efficient.
s‡ ˆ t‡ : 24†
Proof. Suppose that xo ; yo † is CCR-inecient.
Then, k; s ; s‡ † is feasible for [SBM] and its ob-
Then, we have either h < 1 or (h ˆ 1 and
jective value is
t  ; t‡ † 6ˆ 0; 0††. From (25), in both cases, we
P 
1 1=m†f miˆ1 ti  xio ‡ m 1 h †g have q < 1 for a feasible solution of [SBM]. Hence,
qˆ Ps  xo ; yo † is SBM-inecient.
1 ‡ 1=s† rˆ1 tr‡ yro
Pm  On the other hand, suppose that xo ; yo † is
h 1=m† iˆ1 ti  xio SBM-inecient. Then, it holds s  ; s‡ † 6ˆ 0; 0†.
ˆ P  : 25†
1 ‡ 1=s† srˆ1 tr‡ yro By the statements (26) and (27), h; l ˆ k ;
t ˆ h 1†xo ‡ s  ; t‡ ˆ s‡ † is feasible for
We have the following theorem. [CCR], provided h 1†xo ‡ s  P 0. There are
two cases.
Theorem 1. The optimal SBM q is not greater Case 1 (h ˆ 1 then t ˆ s  ; t‡ ˆ s‡ † 6ˆ
than the optimal CCR h . 0; 0†). In this case, an optimal solution for [CCR]
is CCR-inecient.
Proof. Case 2 (h < 1). In this case, xo ; yo † is CCR-
P  inecient.
h 1=m† miˆ1 ti  xio Therefore, CCR-ineciency is equivalent to

q 6q ˆ Ps  6 h
1 ‡ 1=s† rˆ1 tr‡ yro SBM-ineciency. Since the de®nitions of ecient
and inecient are mutually exclusive, we have
1 Xm

t  xio 6 h :  proved the theorem. 
m iˆ1 i

4. Observations on the dual problem

Notice that the coecient 1= m xio † of the input
excess si in q plays a crucial role in validating One of the important characteristics of DEA is
Theorem 1. its dual side, as represented by the dual program of
 K. Tone / European Journal of Operational Research 130 (2001) 498±509 503

the original linear program. This links the e- opments related to the virtual dual variables into
ciency evaluation with the economic interpreta- the SBM model, e.g. the assurance region methods
tion. (Thompson et al., 1986, 1997; Thompson and
Thrall, 1994), and the cone-ratio models (Charnes
et al., 1990; Tone, 1997), among others. These
4.1. The dual program of the SBM model as pro®t modi®cations will contribute to the enhancement
maximization of the potential application of the model sub-
stantially. We will introduce this subject in Section
The dual program of the problem [LP] in Sec- 4.3.
tion 2 can be expressed as follows, with the dual
variables n 2 R; v 2 Rm and u 2 Rs :
[DP] 4.2. Comparisons of dual programs in CCR and
SBM models
maximize n 29†
subject to n ‡ vxo uyo ˆ 1; 30† The dual program of the CCR model can be
expressed as
vX ‡ uY 6 0; 31†
1 [DCCR]
v P ‰1=xo Š; 32†
m maximize gyo 38†
n
u P ‰1=yo Š; 33† subject to nxo ˆ 1; 39†
s
nX ‡ gY 6 0; 40†
where the notation ‰1=xo Š designates the row vec-
n P 0; g P 0: 41†
tor 1=x1o ; 1=x2o ; . . . ; 1=xmo †.
By Eq. (30), we can eliminate n. Then, this This program originates from the ratio form CCR
problem is equivalent to the following: model (Charnes et al., 1978) below:
‰DP0 Š gyo
maximize 42†
maximize uyo vxo 34† nxo
gyj
subject to uY vX 6 0; 35† subject to 61 8j†; 43†
nxj
1
v P ‰1=xo Š; 36† n P 0; g P 0: 44†
m
1 vxo ‡ uyo
uP ‰1=yo Š: 37† Thus, the CCR model tries to ®nd the virtual costs
s n and prices g so that the ratio gyo =nxo is maxi-
The dual variables v 2 Rm and u 2 Rs can be in- mized, subject to the ratio constraint gyj =nxj 6 1
terpreted as the virtual costs and prices of input for every DMU j.
and output items, respectively. The dual problem The SBM model proposed in this paper deals
aims to ®nd the optimal virtual costs and prices for with the pro®t instead of the ratio in the CCR
the DMU xo ; yo † so that the pro®t uyj vxj does model.
not exceed zero for any DMU (including xo ; yo †),
and maximizes the pro®t uyo vxo for the DMU
xo ; yo † concerned. Apparently, the optimal pro®t 4.3. Taking account of cost/price information
is at best zero and hence n ˆ 1 for the SBM e-
cient DMUs. Some may question the rationale behind max-
Constraints (32) and (33) restrict the feasible v imizing the objective function (5) to evaluate the
and u to the positive orthant. Using this frame- eciency of DMUo . The SBM will project the
work, we can incorporate other important devel- DMU to a ``furthest'' point on the ecient fron-
504 K. Tone / European Journal of Operational Research 130 (2001) 498±509

tiers in the sense that the objective function is to be and

minimized by ®nding the maximal slacks. The
Qˆ
upper bounds of slacks introduced in Section 2.3 0 1
will go some way to correspond to this question. L12 U12 L13 U13












B 1 1 0 0











C
However, the dual problem given above will con- B C
B C
tribute to making the SBM understandable in the B 0 0 1 1











C:
B C
economic interpretation. Since the dual variables v @























A
and u can be interpreted as the virtual costs and
























prices of the corresponding inputs and outputs, we
can embed cost/price information into the dual The matrices P and Q have dimensions m  n1 and
problem. A similar situation occurs in the assur- s  n2 , respectively, where n1 and n2 are deter-
ance region model of Thompson et al. (1986). In mined by the number of assurance region con-
many applications, information on costs and straints imposed.
prices is unavailable, or is subject to change by The dual of the abovesaid program can be ex-
chance. Hence it may be reasonable to set the pressed, using t 2 R; S 2 Rm ; S ‡ 2 Rs ; K 2 Rn ;
lower and upper bounds of the ratio of virtual U 2 Rn1 ; P 2 Rn2 as variables, as below.
costs of two items as follows:
[SBM-AR]
vj
lij 6 6 uij : 45† 1 X m
vi minimize g ˆ t S =xio 53†
m iˆ1 i
Similarly, for outputs, we can impose the lower 1X s
(upper) bound on the ratio of the virtual prices of subject to 1 ˆ t ‡ S ‡ =yro ;
s rˆ1 r
outputs i to j as follows:
txo ˆ X K ‡ S P U;
uj ‡
Lij 6 6 Uij : 46† tyo ˆ Y K S ‡ QP;
ui
K P 0; S P 0; S ‡ P 0;
Thus, we have an SBM with an assurance region t > 0; U P 0; P P 0:
of (v; u) as follows:
Let an optimal solution of [SBM-AR] be
‰DP00 Š g ; t ; K ; S  ; S ‡ ; U ; P †. Then we have an op-
maximize uyo vxo 47† timal solution of the SBM under the assurance
region constraints (51) and (52) as de®ned by
subject to uY vX 6 0; 48†
1 q ˆ g ; k ˆ K =t ; s 
ˆ S  =t ;
v P ‰1=xo Š; 49†
m s‡ ˆ S ‡ =t ; / ˆ U =t ; p ˆ P =t : 54†
1 vxo ‡ uyo
uP ‰1=yo Š; 50† A DMU is called ``SBM-AR ecient'' if and only
s
vP 6 0; 51† if q ˆ 1. The SBM projection under the assurance
region constraints can be attained by
uQ 6 0; 52†
where b
xo xo s 
P / ˆ X k †; 55†
‡  
b
yo yo ‡ s ‡ Qp ˆ Y k †: 56†
Pˆ
0 1
l12 u12 l13 u13












B 1 1 0 0











C
B C 5. An illustrative example
B C
B 0 0 1 1











C
B C
@























A In this section, we compare the SBM with the
























CCR model using a simple illustrative problem
 K. Tone / European Journal of Operational Research 130 (2001) 498±509 505

Table 1 has the full eciency score h ˆ 1, although it has a

Two inputs and two outputs data shortfall of t2‡ ˆ 1 in Output2 against C. However,
DMU Input1 Input2 Output1 Output2 when this factor was taken into account, the SBM
A 4 3 2 3 score of D came down to q ˆ 0:667. Similarly, the
B 6 3 2 3 SBM scores of A and B were worse than those in
C 8 1 6 2
the CCR model due to the existence of slacks.
D 8 1 6 1
E 2 4 1 4 Finally, CCR-ecient C and E remained at the
ecient status under SBM evaluations, as claimed
by Theorem 2.
The optimal weights of both models are ex-
consisting of ®ve DMUs with two inputs and two
hibited in Table 3.
outputs. The data set is exhibited in Table 1.

5.2. Comparisons with the CCR model under

5.1. Comparisons with the CCR model assurance region constraints

First, we compare the results obtained by ap- In order to compare the change in eciency
plying the input-oriented CCR model with those owing to the addition of assurance region con-
using the SBM, as displayed in Table 2. The no- straints, we augmented the following ratio con-
tations in the table correspond to those in (17), straints to the pairs of inputs and outputs for the
(18) and (7). Hence, t and t‡ denote the optimal abovesaid sample problem:
slacks for the CCR model, while s and s‡ denote
those for the SBM. Since the CCR score is a radial v1 u1
0:5 6 61 and 0:5 6 6 1: 57†
measure and takes no account of slacks, DMU D v2 u2

Table 2
Comparisons with the CCR model
DMU CCR SBM
Score Slack Score Slack
h t1 t2 t1‡ t2‡ q s1 s2 s‡
1 s‡
2

A 0.9 0 0 0.4 0 0.798 0 0.357 0.714 0

B 0.833 0 0 1.5 0 0.568 0 0.643 2.286 0
C 1 0 0 0 0 1 0 0 0 0
D 1 0 0 0 1 0.667 0 0 0 1
E 1 0 0 0 0 1 0 0 0 0

Table 3
Comparisons of optimal weights
DMU CCR SBM
Score Weight Score Weight
h n1 n2 g1 g2 q v1 v2 u1 u2
A 0.9 0.04 0.28 0 0.3 0.798 0.181 0.167 0.199 0.207
B 0.833 0.037 0.260 0 0.278 0.568 0.135 0.167 0.142 0.199
C 1 0.104 0.167 0.111 0.167 1 0.063 0.5 0.083 0.25
D 1 0.125 0 0.167 0 0.667 0.062 0.5 0.056 0.333
E 1 0.125 0.188 0.125 0.219 1 0.411 0.125 0.5 0.205
506 K. Tone / European Journal of Operational Research 130 (2001) 498±509

Similarly, we imposed the same weight con- 8r†. It can be concluded that in the SBM all
straints to n and g for the CCR model in (38)±(41) inputs and outputs contribute to evaluation of
as follows: eciency, at least at the levels mentioned above.
It is observed that in the CCR-AR, A, B and D
n1 g1
0:5 6 6 1 and 0:5 6 6 1: 58† showed reduced scores. This was caused by the
n2 g2 addition of the assurance region constraints. C and
Comparisons of the results of these problems E remained at the status of full eciency. On the
under the assurance region constraints, i.e., other hand, in the SBM-AR, even E dropped from
CCR-AR and SBM-AR, are exhibited in Table 4. the status of eciency by dint of these assurance
In the CCR model, the complementary slack- region conditions. This was also caused by the
ness conditions between slacks and weights assert di€erence of the models, i.e., the ratio maximiza-
that tion and the pro®t maximization.

ni ti  ˆ 0 8i† and gr tr‡ ˆ 0 8r†:

6. How to deal with zeros in data
Hence, it is observed that DMUs A and B have
g1 ˆ 0 and D has g2 ˆ 0. This means that Out- So far, we have assumed that the data set is
put1 was not accounted for eciency evaluations positive, i.e., X > 0 and Y > 0. In this section, we
of A and B. On the other hand, the SBM has the relax this assumption and show how to deal with
following complementarity conditions at opti- zeros in the input/output data and even negative
mality: output data. This will considerably expand the
applicability of the SBM to real world problems,
 
1 which essentially involve systematic zeros in the
vi s ˆ0 8i† input/output data matrix.
m xio i

and
6.1. Zeros in input data
 

q
ur s‡ ˆ 0 8r†; If xo has zero elements, we can neglect the
s yio r
slacks corresponding to these zeros. Suppose, for
where q is the SBM score. Thus, vi and ur are example, that x1o ˆ 0. Then, the ®rst constraint
bounded below by 1= m xio † and q = s yro †, re- leads to:
spectively, and are all positive. Furthermore, the X
n
weighted input satis®es the relation vi xio P 1=m x1j kj ‡ s1 ˆ x1o ˆ 0:
8i† and the weighted output satis®es ur yro P q =s jˆ1

Table 4
Comparisons with the CCR model under assurance region constraints
DMU CCR-AR SBM-AR
Score Weight Score Weight
h n1 n2 g1 g2 q v1 v2 u1 u2
A 0.857 0.111 0.186 0.107 0.214 0.667 0.167 0.333 0.167 0.333
B 0.702 0.091 0.152 0.088 0.175 0.5 0.125 0.25 0.125 0.25
C 1 0.111 0.111 0.125 0.125 1 0.25 0.5 0.25 0.5
D 0.875 0.111 0.111 0.125 0.125 0.5 0.25 0.5 0.25 0.5
E 1 0.167 0.167 0.182 0.205 0.667 0.333 0.667 0.333 0.667
 K. Tone / European Journal of Operational Research 130 (2001) 498±509 507
!
Hence, we have s1 ˆ 0 for every feasible solution. 1 X
m Xs
1
Thus, we can delete s1 from the set of variables to minimize hi ‡ 59†
m‡s iˆ1 rˆ1
/r
be determined by the model. Correspondingly, in
the objective function, the term s1 =x1o is removed X
m
subject to hi xio P xij kj i ˆ 1; . . . ; m†;
and m should be reduced by 1 (m ! m 1). Notice
iˆ1
that the abovesaid constraint should be kept in the
X
s
set of constraints. /r yro 6 yrj kj r ˆ 1; . . . ; s†;
rˆ1

0 6 hi 6 1; / P 1 8i; r;
6.2. Zeros in output data
kj P 0 j ˆ 1; . . . ; n†:
Suppose that yo has y1o ˆ 0. Then, the ®rst Let us change notations by introducing
output-constraint leads to sio P 0† i ˆ 1; . . . ; m† and s‡
ro P 0† r ˆ 1; . . . ; s†,

X
n which satisfy the relations
y1j kj s‡
1 ˆ y1o ˆ 0: xio sio yro ‡ s‡
ro
jˆ1 hi ˆ 6 1† and /r ˆ P 1†:
xio yro
There are two important cases to be considered: Then, after some mathematical manipulations, the
Case 1. The target DMU possesses no function abovesaid Russell formulation comes to
to produce the ®rst output. In this case, we can
delete the term s‡ 1 =y1o from the objective function,
‰Russell0 Š
since s‡
1 has no role in evaluating the eciency of
!
the DMU. The number of terms (s) in the objective 1 1 Xm
minimize m 1 s =xio
function should be reduced by 1 (s ! s 1). m‡s m iˆ1 io
Case 2. The target DMU has a function with !
X
s
1
the potential of producing the ®rst output but does ‡ 60†
not ulilize it. In this case, we may replace y1o by a rˆ1
1 ‡ s‡
ro =yro
small positive number or by subject to xo ˆ X k ‡ so ;
1 yo ˆ Y k s‡
o;
y1o minfy1j j y1j > 0; j ˆ 1; . . . ; ng: k P 0:
10

It should be remembered that the term s‡ 1 =y1o in

the objective function has the role of a penalty in
this case, and that 1=y1o should be suciently
large.
Finally, negative output data can be dealt using
the same approach adopted for handling zeros in
output data.
7. Comparisons with the Russell measure of e-
ciency
The Russell graph measure of technical e-
ciency (F
are et al., 1985) is de®ned as follows:
[Russell]
The SBM measure is similar to Russell's in that
both deal directly with slacks and give an eciency
measure between 0 and 1. Also both are monotone
decreasing with respect to slacks. However, the
SBM di€ers from the Russell measure in the fol-
lowing ways.
1. The Russell measure needs to be solved using a
nonlinear programming problem, while the
SBM can be solved using the linear program
technology.
2. The Russell measure is an average of an arith-
metic mean and a harmonic mean, and its
meaning is unclear, while the SBM can be inter-
preted as explained in Section 2.2.
3. More importantly, the Russell measure has no
de®nite dual program and it is dicult to attain
508 K. Tone / European Journal of Operational Research 130 (2001) 498±509
an economic interpretation. Hence it is also not
®tted for embedding cost/price information into
the model, whereas the SBM has a well-de®ned
dual program which can be interpreted as a vir-
tual pro®t maximization problem as described
in Section 4.
4. Fare et al. (1978, 1994) introduced the input
(output) oriented Russell measure, which is
equivalent to the input (output) oriented
SBM, if we deal with only the numerator (de-
nominator) of the SBM in (7).
8. Conclusion
This article proposed a scalar measure SBM of
eciency in DEA. In contrast to the CCR and
BCC measures, which are based on the propor-
tional reduction (enlargement) of input (output)
vectors and which do not take account of slacks,
the SBM deals directly with input excess and
output shortfall. Although the additive model has
the (weighted) sum of slacks as its objective and
can discriminate between ecient and inecient
DMUs, it has no means to gauge the depth of
ineciency per se. In this framework, the SBM
shows a sharp contrast to CCR, BCC and, other
measures proposed so far.
The SBM satis®es such properties as unit in-
variance and monotone with respect to slacks.
Furthermore, it is reference-set dependent, i.e. the
measure is determined only by its reference-set and
is not a€ected by statistics over the whole data set.
Also, this model can be modi®ed to cope with in-
put or output-orientation as special cases. These
cases are the same as those used in the input
(output) oriented Russell measure of technical ef-
®ciency. The dual program revealed that SBM
tries to ®nd the maximum virtual pro®t, unlike the
CCR model, which attempts to ®nd the maximum
ratio of virtual output over virtual input.
The numerical example demonstrated the
compatibility of SBM with other measures and its
potential applicability for practical purposes.
Although this study concentrated on the basic
characteristics of the proposed model, further
theoretical research and applications should be
developed in diverse areas, including studies in the
combinations of this method with other recent
developments in DEA.
Acknowledgements
I am grateful to Professor Thrall for his com-
ments on the earlier version of this paper. I also
thank the two referees for their constructive sug-
gestions, which improved this paper signi®cantly.
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