An AHP/DEA methodology for ranking decision making units

Z. Sinuany-Stern, A. Mehrez, Y. Hadad

Research output: Contribution to journalArticlepeer-review

226 Scopus citations

Abstract

This paper presents a two-stage model for fully ranking organizational units where each unit has multiple inputs and outputs. In the first stage, the Data Envelopment Analysis (DEA) is run for each pair of units separately. In the second stage, the pairwise evaluation matrix generated in the first stage is utilized to rank scale the units via the Analytical Hierarchical Process (AHP). The consistency of this AHP/DEA evaluation can be tested statistically. Its goodness of fit with the DEA classification (to efficient/inefficient) can also be tested using non-parametric tests. Both DEA and AHP are commonly used in practice. Both have limitations. The hybrid model AHP/DEA takes the best of both models, by avoiding the pitfalls of each. The nonaxiomatic utility theory limitations of AHP are irrelevant here: since we are working with given inputs and outputs of units, no subjective assessment of a decision maker evaluation is involved. AHP/DEA ranking does not replace the DEA classification model, rather it furthers the analysis by providing full ranking in the DEA context for all units, efficient and inefficient.

Original languageEnglish
Pages (from-to)109-124
Number of pages16
JournalInternational Transactions in Operational Research
Volume7
Issue number2
DOIs
StatePublished - 1 Jan 2000

Keywords

  • Analytical hierarchical process (AHP)
  • Data envelopment analysis (DEA)
  • Decision theory
  • Efficiency
  • Multi-criteria decision analysis (MCDA)
  • Ranking
  • Scaling

ASJC Scopus subject areas

  • Business and International Management
  • Computer Science Applications
  • Strategy and Management
  • Management Science and Operations Research
  • Management of Technology and Innovation

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