Data Envelopment Analysis

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Problem 2. A Data Envelopment Analysis evaluating the relative efficiency of hospitals (DEA) is an application of linear programming used to measure the relative efficiency of operating units with the same goals and objectives. As explained in the course, DEA can measure the relative efficiency of a group of hospitals. The data seen below involving seven teaching hospitals include three input measures and four output measures. Input Measures Hospital Full-Time Equivalent Nonphysicians Supply Expense ($1000s) Bed-Days Available (1000s) A 310 134.6 116 B 278.5 114.3 106.8 C 165.6 131.3 65.52 D 250 316 94.4 E 206.4 151.2 102.1 F 384 217 153.7 G 530.1 770.8 215 Output Measures Hospital Patient-Days (65 or older) (1000s) Patient-Days (under 65) ($1000s) Nurses Trained Interns Trained A 55.31 49.52 291 47 B 37.64 55.63 156 3 C 32.91 25.77 141 26 D 33.53 41.99 160 21 E 32.48 55.3 157 82 F 48.78 81.9 285 92 G 58.41 119.7 111 89 Formulate a linear programming model based on DEA approach to evaluate the performance of hospital D. Solve the problem formulated in (a), and show all of the Excel or QM templates you use in your Is hospital D relatively inefficient? What is your interpretation of the value of the objective function? How many patient-days of each type are produced by the composite hospital? Which hospital would you recommend hospital D consider emulating to improve the efficiency of its operation?

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