Robust data envelopment analysis with variable budgeted uncertainty

Aliasghar Arabmaldar, Adel Hatami-Marbini, Dominic Loske, Maik Hammerschmidt and Matthias Klumpp

European Journal of Operational Research, 2024, vol. 315, issue 2, 626-641

Abstract: Including uncertainty in data envelopment analysis (DEA) is vital to achieving stable and reliable performance evaluations for the field of operational research as business environments are becoming increasingly volatile and unpredictable. Robust DEA models with budgeted uncertainty have been drawing particular attention in the DEA literature for modelling uncertainties, aiming to obtain robust efficiency scores in a way that guarantees the feasibility of solutions. A concern with such robust DEA models – which has been largely ignored in the literature – is that incorporating high uncertainty levels might result in too conservative efficiency measures, possibly reducing the decision support value of such information. To address this concern, this paper tackles uncertainties by employing variable budgeted uncertainty, which is a generalisation of the budgeted uncertainty. We introduce a novel robust DEA model with variable budgeted uncertainty that is less conservative than extant robust DEA models. Furthermore, we suggest a solution for specifying the probabilistic bounds for constraint violations of the uncertain parameters in robust DEA models. A comparison of the introduced robust DEA model with existing robust DEA models based on a numerical example shows an average reduction in the price of robustness by approximately 20%. Finally, the usefulness and applicability of the suggested model are demonstrated by using a large-scale data set in the context of grocery retailing.

Keywords: Data envelopment analysis; Robust optimisation; Conservative levels; Variable budgeted uncertainty; Grocery retail stores (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377221723009025
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:315:y:2024:i:2:p:626-641

DOI: 10.1016/j.ejor.2023.11.043

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().