Scandinavian Working Papers in Economics

Oslo University, Department of Economics

No 11/2016: Smoothing the frontier in the DEA models

Finn Førsund (), Vladimir W Krivonozhko and Andrey V. Lychev
Additional contact information
Finn Førsund: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Vladimir W Krivonozhko: National University of Science and Technology «MISiS», Moscow, Russia
Andrey V. Lychev: National University of Science and Technology «MISiS», Moscow, Russia

Abstract: Some inadequate results may appear in the DEA models as in any other mathematical model. In the DEA scientific literature several methods were proposed to deal with these difficulties. In our previous paper, we introduced the notion of terminal units. It was also substantiated that only terminal units form necessary and sufficient sets of units for smoothing the frontier. Moreover, some relationships were established between terminal units and other sets of units that were proposed for improving the frontier. In this paper we develop a general algorithm for smoothing the frontier. The construction of algorithm is based on the notion of terminal units. Our theoretical results are verified by computational results using real-life data sets and also confirmed by graphical examples.

Keywords: Data Envelopment Analysis (DEA; Terminal units; Anchor units; Exterior units

JEL-codes: C44; C61; D24

17 pages, September 21, 2016

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