Use of Data Envelopment Analysis in Cost Analysis and Estimating,

Data Envelopment Analysis DEA was developed with the idea of evaluating the performance measurign productivity or efficiency of not-for-profit organizations. However, it appears that DEA also has potential as a tool for use in traditional cost estimatinganalysis roles. The purpose of this paper is to briefly introduce the DEA methodology to the cost analysis community. We proceed in this paper by first presenting the DEA model formulation. This is followed by a description of the characteristics and conventions of the DEA model. The next section provides an example of the formulation of the DEA model for a specific analysis. The paper concludes with a discussion on possible avenues of DEA use in cost estimatinganalysis.