DEA-R: ratio-based comparative efficiency model, its mathematical relation to DEA and its use in applications

Despić, Ozren; Despić, Mladen; Paradi, Joseph C.

doi:10.1007/s11123-007-0050-x

Cited by 62 publications

(16 citation statements)

References 16 publications

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“…Moreover, although the financial ratios method has rarely been used by scholars to assess and compare the performance of water industry companies, some researchers (Despic et al , 2007; Gonzalez‐Bravo, 2007) have recently proposed new tools which integrate financial ratios analysis with other methods, like DEA, revaluating the role of ratios for measuring efficiency. In addition, Feroz et al (2003) have shown that financial ratios analysis gives the same results as DEA if both are applied to the same sector.…”

Section: Research Questions and Methodologymentioning

confidence: 99%

Factors affecting the performance of water utility companies

Guerrini

Romano

Campedelli

2011

International Journal of Public Sector Management

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Purpose – The purpose of this paper is to carry out an analysis of Italian water utility companies to determine whether their performance was related to certain relevant variables that have been broadly discussed in the existing literature. Among these are ownership structure, size and diversification. In addition, the paper considers another variable – the geographical location. Design/methodology/approach – The paper reviewed the annual financial statements of 80 Italian water utility companies between 2004 and 2008. It also obtained data regarding tariffs, volumes supplied and population served from Conviri, the Italian national authority for water. Finally, the paper discusses the significant differences among clusters, using parametric statistic methods. Findings – It was found that ownership structure, size, diversification and geographical location had an impact on the performance of water utility companies, although with different degrees of significance. Research limitations/implications – Further studies are necessary in order to improve the way that performance of water utilities is assessed. First of all, it might be helpful to improve our data categories, adding financial data, tariffs, volumes supplied and population served for more than one year and obtaining segmental reports for multi-utilities. In addition, it would be interesting to apply other methods, such as DEA analysis, to confirm our research findings. Practical implications – For a local authority it is convenient to entrust water services to publicly owned companies because they apply lower tariffs and make higher investments pro capita on the pipe network. Moreover, since economies of scale and scope exist, a company’s growth and diversification should be encouraged. Social implications – In Italy the water industry is currently the focus of a vast political debate. As a matter of fact, a recent law (n. 133/2008 article 23-bis modified in November 2009) encourages private administration of this industry. The results led to an improvement in the debate on the strategic choices and organizational structure of water utilities, giving helpful suggestions to policy makers and local authorities for developing future strategies. Originality/value – The research findings improve the existing literature on performance assessment regarding water utilities, for the first time focusing on the Italian context, where companies with different features coexist: public and private utilities, small, medium and large companies as well as mono and multi-utilities

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Section: Research Questions and Methodologymentioning

confidence: 99%

Factors affecting the performance of water utility companies

Guerrini

Romano

Campedelli

2011

International Journal of Public Sector Management

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“…When only ratio data of inputs to outputs or vice versa are available, conventional DEA models are not capable of evaluating the DMU. Furthermore, several studies were conducted in this field based on the idea of Despic et al (2007). The multiplier DEA-R with constant returns to scale assumption for evaluating DMU p , when only ratios y rj x ij are accessible, is given as follows: min θ p s:t:…”

Section: Cra Modelmentioning

confidence: 99%

“…There are some shortcomings in DEA such as the lack of access to input and output data and presence of the non-Archimedean « for input and output weighs, which leads to pseudo-inefficiency. To overcome such problems and to find more realistic and more available targets for DMUs, financial organizations and institutes are using DEA models based on ratio analysis (DEA-R) models (Despic et al (2007); Wei et al (2011aWei et al ( , b, c), (2012). Some further studies have also been conducted in this regard (Chen and Ali (2002); Emrouznejad and Amin (2009); Olesen et al (2015), ( 2017)), which indicates the significance of the subject.…”

Section: Introductionmentioning

confidence: 99%

Two-stage incentives system for commercial banks based on centralized resource allocation model in DEA-R

Kamyab¹,

Mozaffari

Gerami

et al. 2020

IJPPM

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PurposeIt is always of great importance for managers in organizations to evaluate their staff members and create incentive systems, using instruments such as Data Envelopment Analysis (DEA) and DEA-R (DEA models based on ratio analysis). The purpose of this paper is to propose a two-stage network incentives system for commercial banks.Design/methodology/approachCentralized Resource Allocation (CRA) models make it possible to project all decision-making units (DMUs) onto the efficient frontier by solving a single linear programming model. In this paper, we use our proposed DEA-R-based CRA models to evaluate commercial banks in a two-stage case when the only ratios available are the assets-to-costs and income-to-assets vectors.FindingsThirteen commercial banks modeled as two-stage networks were evaluated by the models proposed in two different cases of ratio data. Results suggest that the proposed methodology yields more accurate efficiency scores, thus allowing better discrimination among DMUs. Furthermore, evaluating the DMUs when they are structured as two-stage (or even three-stage) networks makes it possible to examine the incentives system in more detail. Therefore, the use of incentive systems by managers would allow a better focus on the priority activities of commercial banks and a faster movement toward the frontier of best practices.Originality/valueThe super-efficiency scores of a number of commercial banks are evaluated based on the CRA model, as a cornerstone criterion for the two-stage evaluation in DEA-R, thus allowing the rank of each commercial bank in terms of the incentives system rather on the performance of the productive process.

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“…As it is impossible to determine the 'absolute efficiency' that is evaluated based on the ideational datum point, the degree of efficiency is measured by comparing the units with a reference set that has identical input and output structure. 40 Considering a set of input and output variables, DEA provides a unified performance efficiency measurement (efficiency score) for each DMU. This measurement is completed by developing an empirically based 'best-practice' or efficient frontier as a result of an identified set of efficient DMUs (on the frontier) and inefficient DMUs (not on the frontier).…”

Section: Crs and Vrs Dea Techniquesmentioning

confidence: 99%

Assessment of transit transport corridor efficiency of landlocked African countries using data envelopment analysis

Fanou

Wang

2018

S. Afr. J. Sci.

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We used a data envelopment analysis (DEA) to examine the efficiency and performance of transport systems of landlocked African countries (LLACs). We conducted a comparative performance efficiency analysis of transfer transport systems for LLACs’ corridors. Three different types of DEA models were proposed and used to measure the relative efficiencies of transit transport using a 6-year data set (2008–2013) of some selected LLACs. The results show that the average pure technical and scale efficiency scores are 90.89% and 37.13%, respectively. Two units (13.33%) are technically efficient (technical and scale efficiency) while four units (26.66%) are only purely technically efficient over the observed period. Swaziland was the most efficient corridor while the Central African Republic corridor was the least efficient throughout the monitored years. The results indicate the relevance of minimising trade costs to stimulate landlocked countries’ exports.

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DEA-R: ratio-based comparative efficiency model, its mathematical relation to DEA and its use in applications

Abstract: DEA, Efficiency, Ratio analysis, Weight restrictions, C61, C14,

Cited by 62 publications

References 16 publications

Factors affecting the performance of water utility companies

Factors affecting the performance of water utility companies

Two-stage incentives system for commercial banks based on centralized resource allocation model in DEA-R

Assessment of transit transport corridor efficiency of landlocked African countries using data envelopment analysis

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