Comparative Performance of Units and Organizations with Multiple Inputs and Outputs: Introduction to Data Envelopment Analysis

Data envelopment analysis (DEA) is a technique that can be used to compare the multiple dimensions of performance (efficiency) of producing units that consume some input resources to produce some output products/services. This chapter describes the basics of DEA methodology and presents several problems aimed at evaluating the comparative efficiency (performance) of a network of hospitals and medical labs. The Excel solver is used for setting up DEA as a general linear optimization problem and for producing a sensitivity report. It is demonstrated how the shadow prices produced by the solver sensitivity report can be used for the estimation of the improvement targets for lower-performing units.