I know that using non-discretionary input could be an issue in the original, input-oriented DEA models where input can be expanded and/or contracted. The concern, I think, was that we don't want to produce efficiency scores suggesting efficiency could be improved by reducing uncontrollable (non-discretionary) inputs. However, I wonder if the inclusion of non-discretionary input is as consequential for output-oriented VRS DEA models? Most of the literature is based on input-oriented DEAs. Any comments will be appreciated, Thanks.
the envelopment surface will differ depending on the scale assumptions that underpin the model. Two scale assumptions are generally employed: constant returns to scale (CRS), and variable returns to scale (VRS). The latter encompasses both increasing and decreasing returns to scale. CRS reflects the fact that output will change by the same proportion as inputs are changed (e.g. a doubling of all inputs will double output); VRS reflects the fact that production technology may exhibit increasing, constant and decreasing returns to scale. However, there are generally a priori reasons to assume that fishing would be subject to variable returns and, in particular, decreasing returns to scale .
A range of DEA models have been developed that measure efficiency and capacity in different ways. These largely fall into the categories of being either input-oriented or output-oriented models.With input-oriented DEA, the linear programming model is configured so as to determine how much the input use of a firm could contract if used efficiently in order to achieve the same output level. For the measurement of capacity, the only variables used in the analysis are the fixed factors of production. As these cannot be reduced, the input-oriented DEA approach is less relevant in the estimation of capacity utilization. Modifications to the traditional input-oriented DEA model, however, could be done such that it would be possible to determine the reduction in the levels of the variable inputs conditional on fixed outputs and a desired output level.
In contrast, with output-oriented DEA, the linear programme is configured to determine a firm’s potential output given its inputs if it operated efficiently as firms along the best practice frontier. This is more analogous to the SPF approach, which estimated the potential output for a given set of inputs and measured capacity utilization as the ratio of the actual to potential output, and is consistent with the illustration of the method . Output-oriented models are “...very much in the spirit of Neo-classical production functions defined as the maximum achievable output given input quantities.
Choosing a logical default input and changing one of them can give more stable ideas and that means the input that was delivered very interesting in your interest.
