Inverse data envelopment analysis with production trade-offs

¹ School of Economics & Management, Fuzhou University, Fuzhou 350108, P.R. China
² School of Management, Fujian University of Technology, Fuzhou 350118, P.R. China

^* Corresponding author: mjli853@fzu.edu.cn

Received: 27 June 2023
Accepted: 20 December 2023

Abstract

As an important resource allocation and production analysis method, the existing inverse data envelopment analysis (Inverse DEA) methods generally ignore the production trade-offs in the production process. However, in some managerial practice, decision makers (DMs) generally have value judgements concerning the importance of inputs and outputs. These value judgements reflect the production trade-offs of DMs for different inputs and outputs and influence the production process. Therefore, this study investigates the inverse DEA method with production trade-offs. By analyzing the effect of production trade-offs on efficient frontier, this study reveals that the existing methods for identifying the limitations of changed range of inputs and outputs in inverse DEA model under variable returns to scale (VRS) are invalid when considering the production trade-offs, and based on this, the new inverse DEA methods with production trade-offs for resource allocation and production analysis are developed. Moreover, the limitations of changed range of inputs and outputs of the proposed methods are identified, thus avoiding the problem of infeasible solutions. In addition, the application scenarios and practical values of the proposed methods are discussed. Finally, two examples are provided to illustrate the rationality and effectiveness of our approaches.