Multiobjective target setting in data envelopment analysis using AHP

In this paper two new target setting DEA approaches are proposed. The first one is an interactive multiobjective method that at each step of the process asks the decision maker (DM) which inputs and outputs he wishes to improve, which ones are allowed to worsen and which ones should stay at their current level. The local relative priorities of these inputs and outputs changes are computed using the analytic hierarchy process (AHP). After obtaining the candidate target, the DM can update his preferences for improving, worsening or maintaining current inputs and outputs levels and obtain a new candidate target. Thus continuing, until a satisfactory operating point is computed. The second method proposed uses a lexicographic multiobjective approach in which the DM specifies a priori a set of priority levels and, using AHP, the relative importance given to the improvements of the inputs and outputs at each priority level. This second approach requires solving a series of models in order, one model for each priority level. The models do not allow for worsening of neither inputs nor outputs. After the lowest priority model has been solved the corresponding target operating point is obtained. The application of the proposed approach to a port logistics problem is presented. (C) 2007 Elsevier Ltd. All rights reserved.