The role of multiplier bounds in fuzzy data envelopment analysis

The non-Archimedean epsilon ε is commonly considered as a lower bound for the dual input weights and output weights in multiplier data envelopment analysis (DEA) models. The amount of ε can be effectively used to differentiate between strongly and weakly efficient decision making units (DMUs). The problem of weak dominance particularly occurs when the reference set is fully or partially defined in terms of fuzzy numbers. In this paper, we propose a new four-step fuzzy DEA method to re-shape weakly efficient frontiers along with revisiting the efficiency score of DMUs in terms of perturbing the weakly efficient frontier. This approach eliminates the non-zero slacks in fuzzy DEA while keeping the strongly efficient frontiers unaltered. In comparing our proposed algorithm to an existing method in the recent literature we show three important flaws in their approach that our method addresses. Finally, we present a numerical example in banking with a combination of crisp and fuzzy data to illustrate the efficacy and advantages of the proposed approach.