DEA in turn, is most well-liked when measurement error has a low probability to occur and the assumptions of classical manufacturing are not met. An different technique to measure technical efficiency is the Stochastic Frontier Analysis , which is indicated when extreme measurement error is current and might be separated from the technical effectivity measure, and there’s an assumption of excellent match to classical practical types of production. The primary limitation is the small variety of facilities included within the evaluation, which restrict the statistical inferences derived from the Tobit fashions in Step three and subsequently might introduce some additional random error in estimations in Step 4. In addition, because of the high variety of efficient HC and subsequently null slacks values, the Tobit regression analysis couldn’t be adjusted for errors utilizing the bootstrap methodology instructed by Cordero-Ferrera .
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