LINKED-CONE DEA PROFIT RATIOS AND TECHNICAL EFFICIENCY WITH APPLICATION TO ILLINOIS COAL-MINES
RG THOMPSON, PS DHARMAPALA, RM THRALL
INTERNATIONAL JOURNAL OF PRODUCTION ECONOMICS | ELSEVIER SCIENCE BV | Published : 1995
Data Envelopment Analysis (DEA) profit ratios and technical efficiency measures require separate treatment as proved in newly developed theory of Thompson and Thrall. This point is illustrated here by analysis of an example problem; it shows that DEA technical efficiency does not necessarily imply a DEA maximum profit ratio; and, vice versa, a DEA maximum profit ratio does not necessarily imply DEA technical efficiency. The essence of the mathematical framework underlying this argument is provided. Application of the concepts to Illinois coal mining data (previously reported) lends support to the need for separate treatment of DEA technical efficiency and DEA profit ratios. © 1995.