Nonparametric efficiency analysis under uncertainty using data envelopment analysis

Production and cost frontiers of a firm in an industry are directly affected by the uncertainty of market demand and the uncertainty of input availability. The nonparametric approach of data envelopment analysis (DEA) is generalized here in both static and dynamic directions by incorporating these uncertainties. The paper addresses an extension of the convex hull method of DEA for determining a production frontier in the presence of demand and supply uncertainty of outputs and inputs respectively. This is illustrated by an empirical application to the computer industry.