Which measures would you regard as inputs and outputs, respectively? Please provide your justification
A small engineering consulting firm is establishing a plan for next year. The director and the
three partners need to prioritize the eight projects. The expected profit for each project is given
in the following table together with the number of person-days required to prepare each project.
Another measure included is the computing resource measured as the computer processing
unit (CPU) time (in hours). You have been tasked to evaluate which projects they ought to
pursue based on efficiency. Given the sample data below, you plan to construct a data
envelopment analysis (DEA) model:
a. Which measures would you regard as inputs and outputs, respectively? Please
provide your justification.
b. Conduct data envelopment analysis, explain what type of DEA model is selected
and describe the project you regard as “efficient” and “inefficient”, respectively.
c. Which project would you recommend and why?
d. In what ways can you improve on your recommendation? You are free to openly
source for other datasets (or create one) and justify the new set of input and output
measures before conducting another data envelopment analysis. Elaborate on your
recommendations and solutions.
e. Assuming that you have to consider the project from a different industry in your
analysis and you can have any data and measurement at your disposal, what would
be the ideal steps taken to ensure that the projects from different industries are
comparable?
Project Profit (in million £) Persondays
CPU time (hours)
1 2.1 550 200
2 0.5 400 150
3 3 300 400
4 2 350 450
5 1 450 300
6 1.5 500 150
7 0.6 350 200
8 1.8 200 600
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