A comparison of stochastic dominance and stochastic DEA for vendor evaluation

Vendor selection involves decisions balancing a number of conflicting criteria. Data envelopment analysis (DEA) is a mathematical programming approach capable of identifying non-dominated solutions, as well as assessing relative efficiency of dominated solutions. A simple multi-attribute utility function can be applied to a shall set of alternatives, providing a tool to assess relative value, but is subject to error if estimated measures are not precise. This paper compares stochastic DEA with a multiple-criteria model in a vendor selection model involving multiple criteria, reporting simulation experiments varying the degree of uncertainty involved in model parameters.