A stochastic DEA model considering undesirable outputs with weak disposability

Abstract

This paper proposes a stochastic DEA model considering undesirable outputs with weak disposability which not only can deal with the existence of random errors in the collected data, but also depicts the production rules uncovered by weak disposability of the undesirable outputs. This model introduces the concept of risk to define the efficiency of decision making units (DMUs), and utilizes the correlationship matrix of all the variables to portray the weak disposability. On the basis of probability distribution properties, the probabilistic form of the model is transformed to the equivalent deterministic one which is able to be solved. In the application of the model, the environment efficiency evaluation problem is chosen to validate the model by designing different levels of random errors and comparing the new model with the old one. In conclusion, the model, with broad applicability has a more superior analysis capacity than the existing model.