Improved performance evaluation of comparable units with data envelopment analysis (DEA)

Regression analysis is a commonly applied technique used to measure the relationship/predict/forecast of comparable units. A set of comparable units is some group of entities each performing somewhat the same set of activities. In this chapter, we will apply a modified version of our recently developed methodology to incorporate into the regression analysis a new variable that captures the unique weighting of each comparable unit. This new variable is the relative efficiency of each comparable unit that will be generated by a technique called data envelopment analysis (DEA). The results of applying this methodology with the DEA variable to a hospital labor data set will be presented.