Efficiency Analysis for Exogenously Fixed Inputs and Outputs

Abstract

We evaluate, by means of mathematical programming formulations, the relative technical and scale efficiencies of decision making units (DMUs) when some of the inputs or outputs are exogenously fixed and beyond the discretionary control of DMU managers. This approach further develops the work on efficiency evaluation and on estimation of efficient production frontiers known as data envelopment analysis (DEA). We also employ the model to provide efficient input and output targets for DMU managers in a way that specifically accounts for the fixed nature of some of the inputs or outputs. We illustrate the approach, using real data, for a network of fast food restaurants.