Obtaining potential targets: development of an innovative inverse DEA-R cost efficiency model

Generally, we utilise existing inverse data envelopment analysis (DEA) to derive targets when dealing with observed input and output data. If price information is available for inputs and outputs, developing inverse DEA models based on these prices can be valuable in cost reduction. Traditional DEA models, however, become inadequate when evaluating the performance of decision-making units (DMUs) if the ratio of input components to output components (or vice versa) is crucial to the decision maker (DM). As a solution, we develop DEA models to assess technical and cost efficiency for ratio data within the variable returns to scale (VRS) technology, thus establishing the relationship between technical and cost efficiency in these models. In the following sections, we present the development of inverse DEA models for ratio data based on the concept of technical and cost efficiency, along with the feasibility conditions of these proposed models.