Efficiency Measure Under Inter-Temporal Dependence

In this paper, a linear programming (LP) model is proposed to estimate the efficiency of a decision-making unit (DMU) in the framework of dynamic Data Envelopment Analysis (DEA). Necessary and sufficient conditions required for characterizing dynamically efficient paths are established. An LP model is proposed to estimate the dynamic cost efficiency (DCE) measure. It is proved that the aggregate CE in an assessment window is a convex combination of CEs of available periods in the assessment window. In addition, it is shown that a DMU in an assessment window is dynamically efficient when the DMU is dynamically cost/revenue efficient. Mathematical relationships between relative, cost, revenue, and profit efficiencies are studied in the framework of dynamic DEA.

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