On the Interpretation of Value Efficiency

Halme et al., Management Science, 45, 103–115 (1999) have proposed Value Efficiency Analysis as an approach to incorporate preference information in Data Envelopment Analysis (DEA). Generally, a value function includes only ordinal information and thus a value efficiency score does not provide information on the value difference. The score only describes the improvements in the input/output values that are needed in order to make the Decision-Making Unit (DMU) as preferred as the Most Preferred Solution (MPS). This Paper discusses two sets of additional assumptions that enable us to give the efficiency score a value difference interpretation. Copyright Springer Science+Business Media, Inc. 2005