IME634: Management

Decision Analysis
Raghu Nandan Sengupta
Industrial & Management Department
Indian Institute of Technology Kanpur

IME634 RNSengupta,IME Dept.,IIT Kanpur,INDIA 1

Data Envelopment Analysis (DEA)
 Consider you have a system or also called a
decision making unit (DMU), which takes
some inputs (I/Ps), processes them and
produces some outputs (O/Ps)
 Examples of systems or DMUs can be a
machine, a factory, a hospital, an airport, an
university, etc.

IME634 RNSengupta,IME Dept.,IIT Kanpur,INDIA 2

Data Envelopment Analysis (DEA)
(contd..)
 Invariably there may be many such similar systems or
DMUs which take as inputs the same types or set of I/Ps
in different quantum, process them and produces the
O/Ps, also in different quantum
 In such cases we are required to find, what is the rate of
processing of the I/Ps or O/Ps, or what is the efficiency
of the systems, so that we can compare them amongst
themselves and also find out, to what degree they are
deficient when compared to the so called ideal system or
a fully efficient system or an efficient DMU

IME634 RNSengupta,IME Dept.,IIT Kanpur,INDIA 3

Data Envelopment Analysis (DEA)
(contd..)

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Data Envelopment Analysis (DEA)
(contd..)
 Let us also consider three (3) different
concepts of production and returns,
which are
Increasing return to scale (IRTS)
Decreasing return to scale (DRTS)
Constant return to scale (CRTS)

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 Decreasing Return to Scale
(DRTS)

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 Decreasing Return to Scale
(DRTS) (contd..)

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Increasing Return to Scale (IRTS)

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Increasing Return to Scale (IRTS)
(contd..)

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 Constant Return to Scale (CRTS)

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 Variable Return to Scale (VRTS)

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 O/P Oriented Optimization
Models (for K DMUs)

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 O/P Oriented Optimization
Models (for K DMUs) (contd..)

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I/P Oriented Optimization Models
(for K DMUs)

IME634 RNSengupta,IME Dept.,IIT Kanpur,INDIA 14

I/P Oriented Optimization Models
(for K DMUs) (contd..)

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