The measurement of public postal operators’ profit efficiency by using data envelopment analysis (DEA): A case study of the European union member states and Serbia

Abstract

Data envelopment analysis (DEA) is a linear programming methodology aiming to evaluate the relative technical efficiency for each decision making unit (DMU) with multiple inputs and multiple outputs. Each DEA model is formulated as a mathematical programming problem utilizing the values of inputs and outputs of all DMUs. The analytical process is developed on the basis of these inputs and outputs by identifying the best practices in the field. Additionally, DEA can be used as a method to evaluate economic efficiency. In this study, we propose the measurement of public postal operators’ profit efficiency by DEA-based profit efficiency approach. In order to demonstrate the applicability of this approach we measured the profit efficiency of public postal operators (PPOs) in the European Union member states and Serbia as a candidate country. The implications are derived from the empirical study by using VRS model, CRS super-efficiency model and Slack-based model. First, we calculated profit efficiency and super-efficiency scores of all observed PPOs. After that, we repeated the analytical process without influential observations. Finally, we determined the target values of inputs and outputs for profit inefficient PPOs.