Measure Efficiency by DEA model

Parametric methods of efficiency measurement include the Stochastic Frontier Approach (SFA), Thick Frontier Approach (TFA) and Distribution Free Approach (DFA). These methods measure economic efficiency. Economic efficiency is a broader term than technical efficiency. It covers an optimal choice of the level and structure of inputs and outputs based on reactions to market prices. Basic efficiency is a ratio of output over input. To improve efficiency one has to either: (1) increase the outputs, (2) decrease the inputs, (3) if both outputs and inputs increase, the rate of increase for outputs should be greater than the rate of increase for inputs, or (4) if both outputs and inputs are decreasing, the rate of decrease for outputs should be lower than the rate of decrease for inputs.