Determination of return to scale situations in the presence of non-discretionary factors in DEA with interval data

Determination of returns to scale (RTS) is one of the important issues in economic and performance analysis since it gives useful information on the optimal size of the decision making unit (DMU) unit under evaluation. However, there are two difficulties to determine RTS situations in the performance analysis of DMUs. The first one is how to treat the non-discretionary factors, which refer to those factors that influence the performance of DMUs and are at the same time out of the control of the management. The second one is how to deal with interval data which assumes all inputs and outputs lie within lower and upper bounds. In this paper, a modified method is provided to determine the RTS in the existence of non-discretionary factors with interval inputs and outputs. The proposed method is illustrated with a numerical example that shows to be practical and effective in real world situations.

data envelopment analysis, DEA, return to scale, scale elasticity, non-discretionary, interval data