Efficiency and benchmarking in the presence of undesirable (bad) outputs: A DEA approach
About this article
Abstract
Environmental assessment recently becomes a major policy issue in the world. This
study introduces a data envelopment analysis (DEA) model to explore a new use of DEA
for the environmental assessment in which outputs are classified into desirable (good) and
undesirable (bad). Such an output separation is important in the DEA-based environmental
assessment. We used a Range-Adjusted Measure (RAM) DEA model for combining the
two performance measures operational and environmental performance as a unified measure.
Reducing the amount of undesirable outputs is the main purpose of environmental
assessment. Therefor, we try to project the inefficient organization on the efficient frontier
such that the obtained projection produces fewer undesirable outputs than the evaluated
organization. To reach this goal, it is not important to increase or decrease the amount of
inputs.
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