A ratio- based method for ranking production units in profit efficiency measurement

Evaluating profit efficiency measure needs input costs and output prices as well as input–output quantities. It is important to rank production units based on relative or absolute values of their production when costs and prices are available. Ranking production units in data envelopment analysis constitutes ranking individual units based on their profit efficiency ratio measures. Two novel models are presented in this paper for evaluating units based on a profit-dominance criterion. Models consider not only selfappraisal DEA optimal weights, but also all feasible input and output weights. A novel ratio-based and complete ranking method is introduced that is based on computing upper and lower boundaries for profit performance of observed units. An illustrative application of the models is then presented and results are discussed.