Using DEA and AHP for Multiplicative Aggregation of Hierarchical Indicators

Abstract

The author [Pakkar, M.S. (2014) Using Data Envelopment Analysis and Analytic Hierarchy Process to Construct Composite Indicators. Journal of Applied Operational Research, 6(3), 174-187.] recently proposed a multiplicative approach using Data Envelopment Analysis (DEA) and Analytic Hierarchy Process (AHP) to reflect the priority weights of indicators in constructing composite indicators (CIs). Nonetheless, this approach is limited to the situations with a single level hierarchy which might not satisfy the needs of a multiple level hierarchy. Therefore, the current paper extends this approach to the situations in which the indicators of similar characteristics can be grouped into sub-categories and further linked into categories to form a three-level hierarchical structure. An illustrative example of road safety performance for a set of European countries highlights the usefulness of the proposed “extended approach”.