RAM: A range adjusted measure of inefficiency for use with additive models, and relations to other models and measures in DEA

Generalized Efficiency Measures (GEMS) for use in DEA are developed and ana lyzed in a context of differing models where they might be employed. The ad ditive model of DEA is accorded a central role and developed in association with a new measure of efficiency referred to as RAM (Range Adjusted Measur e). The need for separately treating input oriented and output oriented app roaches to efficient measurement is eliminated because additive models effe ct their evaluations by maximizing distance from the efficient frontier (in l(1), or weighted l(1), measure) and thereby simultaneously maximize outpu ts and minimize inputs. Contacts with other models and approaches are maint ained with theorems and accompanying proofs to ensure the validity of the t hus identified relations, New criteria are supplied, both managerial and ma thematical, for evaluating proposed measures. The concept of "approximating models" is used to further extend these possibilities. The focus of the pa per is on the "physical" aspects of performance involved in "technical" and "mix" inefficiencies. However, an Appendix shows how "overall," "allocativ e" and "technical" inefficiencies may be incorporated in additive models.