Data envelopment analysis with ratio data: Challenges and opportunities

Abstract

Data envelopment analysis (DEA) is a well-established technique for performance measurement, which has been regularly applied to both for-profit and not-for-profit organisations to significantly streamline performance management processes. The performance analysis, which aims to scrutinise the processes and operations of a system, does not succeed unless DEA models provide decision-makers with the reliable results. Although many case studies in DEA build on ratio measures to reflect and analyse the performance regardless of awareness of plausible problems exhibited through implementation of DEA models. We argue that the current model in the literature is likely to fail and be unable to function properly. This work is restricted to situations in which numerators and denominators of ratio data are available. In addition, we highlight the emerging opportunities for performance assessment with ratio data.