ALTERNATE METHODS OF TREATING FACTOR WEIGHTS IN DEA

Provisions for controlling factor weights constitute a significant extension of the data envelopment analysis (DEA) methodology, as an effective tool for measuring efficiency. This paper suggests a conceptual framework for the treatment of factor weights in DEA. First, the paper proposes general guidelines for setting bounds on factor weights. Then, it develops and presents alternative methods to limit the range within which these factor weights are allowed to vary. All of these methods involve additional information which is entered into the analysis in the form of constraints, bounds or different objective functions. Finally, the implications of the various approaches is discussed.