A data envelopment analysis approach with efficient and inefficient frontiers for supplier selection in the presence of both undesirable outputs and imprecise data

Supplier selection plays a key role in the organizations because the costs of the raw materials constitute the main part of the final product cost. Today, selecting a suitable supplier is one of the most important purchasing decisions. It generally depends on various criteria. To effectively manage the strategically-important purchasing activity, suitable methods and criteria must be selected for the problem. This paper proposed a “data envelopment analysis with efficient and inefficient frontiers” approach to evaluate and select the best supplier in the presence of undesirable outputs and imprecise data. The data envelopment analysis with efficient and inefficient frontiers considered two efficiencies for the decision-making: One efficiency was measured with respect to the efficiency frontier and is called the best relative efficiency or the optimistic efficiency. The other one was measured with respect to the inefficiency frontier and is called the worst relative efficiency or the pessimistic efficiency. In addition, this approach was utilized to provide new overall performance measures to score the suppliers in the presence of undesirable outputs and imprecise data. Compared to the traditional approach, data envelopment analysis with efficient and inefficient frontiers approach identified the best supplier more easily and accurately. Two numerical examples were provided to illustrate the application of the proposed approach.