This page introduces the key concepts, models, and practical uses of DEA, and answers the most common questions about how it works and how you can apply it using our online DEA software.
Basic Concepts
What is the DEA method?
Data Envelopment Analysis (DEA) is a non-parametric technique used to measure the relative efficiency of decision-making units (DMUs) such as banks, hospitals, or companies based on multiple inputs and outputs.
What is DEA used for?
DEA evaluates how efficiently a unit transforms inputs (resources) into outputs (results) compared to the best-performing units.
How is DEA different from statistical methods?
Unlike regression-based methods, DEA doesn’t require any assumptions about the production function or statistical distribution. It relies on linear programming.
What is a DMU in DEA?
DMU stands for Decision-Making Unit — the entity being evaluated, such as a branch, factory, or organization.
What are inputs and outputs in DEA?
Inputs are the resources consumed (e.g., labor, cost, time), and outputs are the results achieved (e.g., production, service level, satisfaction).
DEA Models and Types
What is the CCR model in DEA?
The CCR model (Charnes, Cooper, and Rhodes) assumes constant returns to scale (CRS) and measures overall technical efficiency.
What is the BCC model in DEA?
The BCC model (Banker, Charnes, and Cooper) assumes variable returns to scale (VRS) and measures pure technical efficiency.
What is the difference between CCR and BCC models?
CCR assumes constant scale, while BCC allows for varying scales of operation across DMUs.
What is the difference between input-oriented and output-oriented DEA models?
Input-oriented models aim to minimize inputs while keeping outputs constant, while output-oriented models aim to maximize outputs with the same level of inputs.
What is the SBM model in DEA?
The Slacks-Based Measure (SBM) model considers input excesses and output shortfalls to measure inefficiency more accurately.
Interpretation and Results
How do we interpret DEA efficiency scores?
Scores range between 0 and 1. A score of 1 means the unit is efficient; values below 1 indicate inefficiency.
What is a reference set in DEA?
The reference set includes efficient DMUs that serve as benchmarks for inefficient ones.
How can inefficient units improve?
By reducing excess inputs or increasing insufficient outputs according to the targets suggested by DEA.
Why are some units always efficient?
Because they form the efficiency frontier — their input/output combinations are the best observed among all DMUs.
Is DEA sensitive to outliers?
Yes, outliers can distort the efficiency frontier and lead to misleading results.
Practical Applications
Where can DEA be applied?
DEA is widely used in banking, healthcare, education, agriculture, energy, transportation, and public sector performance analysis.
Is DEA a Multi-Criteria Decision-Making (MCDM) method?
Yes. DEA can be considered part of the MCDM family since it handles multiple inputs and outputs without predefined weights.
Can DEA handle qualitative data?
Traditional DEA uses quantitative data, but fuzzy or categorical versions (Fuzzy DEA) exist for qualitative cases.
Can DEA rank efficient units?
Yes, the Super-Efficiency DEA model is used to rank DMUs that are already efficient (score = 1).
Can DEA be used for international comparisons?
Yes, DEA is often applied to measure and compare national or regional economic efficiency.
DEA Software and Computation
How can DEA be performed online?
You can use the Online DEA Software at OnlineOutput.com to input your data and get instant results.
What data does the DEA software require?
A list of DMUs, input variables, and output variables entered in a simple table format.
What outputs does the DEA software provide?
Efficiency scores, reference units, target input/output ratios, and improvement suggestions.
Should the data be normalized before DEA?
Yes, normalization is recommended if input and output scales differ significantly.
Is there a limit to the number of inputs and outputs?
Yes, the number of DMUs should be at least three times the total number of inputs and outputs for meaningful results.
Advanced and Research Topics
What is Network DEA?
It extends DEA to analyze multi-stage or internal structures within DMUs.
What is Dynamic DEA?
Dynamic DEA evaluates the efficiency of units over multiple time periods.
What is the Malmquist Productivity Index?
It measures productivity change over time, decomposing it into efficiency and technological change.
Can DEA be combined with other methods?
Yes, DEA is often integrated with AHP, TOPSIS, or regression to achieve hybrid decision-making models.
What are good resources to learn DEA?
A key reference is Cooper, Seiford & Zhu (2011), and many tutorials and tools — such as OnlineOutput.com/DEA-method — provide clear, hands-on explanations.
Experience the DEA online software: