A new approach to data envelopment analysis and its application to industries in Japanese prefectures

In this paper, we propose a new approach for determining the unknown quantities in Banker-Charnes-Cooper models for data envelopment analysis by developing the marginal model synthesization algorithm. In this algorithm, several marginal fractional programming models are first constructed based on a simple numeric optimization. Then, a set of synthetic Banker-Charnes-Cooper models is obtained by compounding the marginal fractional programming models. The marginal model synthesization algorithm is straightforward and computationally efficient. We also present an application of the proposed approach for analyzing the efficiency of industries in Japanese prefectures.