Aggregated Ratio Analysis in DEA

DEA and ratio analysis are commonly viewed as alternatively effective tools in assessing the performance of different DMUs. Many researches have been developed to reveal their inherent relationship and to explore the integration of both methods as well. In this paper, we first question Theorem 1 by Wu et al. (International Journal of Information Technology & Decision Making 4(3) (2005) 369-384) and illustrate a counter example to show the nonequivalence between the aggregated ratio model they proposed and CCR model. The errors which existed in its proof are also indicated. Further, an improved aggregated ratio model is established to better comprehend the inner relationship between the two methods. We demonstrate its equivalence to traditional CCR model, and propose an inference that the observed DMU is ratio efficient if and only if it is CCR efficient. Numerical analysis carefully describes the nontrivial difference between the proposed model and that by Wu et al. (International Journal of Information Technology & Decision Making 4(3) (2005) 369-384), and validates the feasibility of our model.