Data Envelopment Analysis And Its Application In Sport Essay Examples
Type of paper: Essay
Topic: Information, Sports, Time Management, Innovation, Efficiency, Production, Decision, Olympics
Introduction Data envelopment analysis is a management tool that is increasingly gaining popularity. Data envelopment analysis is used in the evaluation of the efficiency of one or more producers. The definition of a producer is integral to understanding data envelopment analysis. In this respect, producers are the decision making units in a system. Data envelopment analysis is different from a typical statistical approach to analyzing producers (Cooper, 2010). The typical statistical approach entails a central tendency approach where one producer is evaluated against another average producer.
The data envelopment analysis is different from the typical statistical approach in that it compares every producer only with the best producers. Even though the data envelopment analysis comes off as better than the typical statistical analysis, it is not always true in all cases. Data envelopment analysis has many applications. It has been used effectively in major sporting events as a management tool. This paper will explore various perspectives on data envelopment analysis, among others as it applies to sport.History of Data Envelopment Analysis Data envelopment analysis was created to meet an existing need. The microeconomic production theory uses a production function to depict the input and output combinations of a firm. The production function allows someone to determine the maximum output that a production system can achieve with different permutations of inputs. This implies that the production function can be used to determine the systems production frontier. When the data envelopment analysis was coined over thirty years ago, the intention was to determine the maximum output that a production system can achieve with different permutations of inputs in empirical applications (Charnes, Cooper & Rhodes, 1978). However, there was an additional incentive. In actual sense, it is practically impossible for actual firms to observe al the input-output combinations that are possible in a given production system. It was for this reason that Charnes, Cooper and Rhodes for the very first time, while improving ideas by Farrell on how to measure the degree of efficiency in various decision making units, applied the concepts of linear programming. This allowed them to create empirical production technology frontiers (Charnes, Cooper & Rhodes, 1978). Since the novel ideas of Charnes, Cooper & Rhodes, (1978), over thirty years ago, there have been significant improvements in data envelopment analysis, making it a powerful analytical tool for quantitatively evaluating and measuring the performance of decision making units.Benefits of Data Envelopment Analysis As highlighted above, data envelopment analysis is a powerful management tool, especially when used constructively. The pedigree of data envelopment analysis is because of inherent benefits. One of the many benefits of using data envelopment analysis is its ability to handle more than one input and output models. One of the models through which inputs and outputs can be handled in data envelopment analysis is the graphical method. The graphical method is very useful and easy, especially when the producers being evaluated are two dimensional. For more complex producers, the linear programming model can be used to handle inputs and outputs. Another benefit of data envelopment analysis is that there is no requirement for making assumptions about functional forms that relate one input to an output. This makes the evaluation of producers relatively easy, even when using the graphical model. The other benefit of data envelopment analysis is that it compares decision making units against one peer or a combination of many peers. As discussed above, date envelopment analysis compares one decision making unit against the best decision making units. This gives improved results through a relatively quick and easy process compared to typical statistical tests. The final benefit of data envelopment analysis is that there is no requirement for a priori relationship between two inputs. This implies that inputs that have different units can be analyzed. For instance, one can analyze units of the number of lives saved versus units of dollars. Such inputs have different units and may not have a priori tradeoff.Applications of Data Envelopment Analysis in Sport As discussed above, data envelopment analysis is important in the quantitative analysis of the efficiency of decision making units. Various decisions have to be made in sports management. For instance, teams would want adequately to determine the frontier zone where their athletes are performing optimally (Haas, 2003). Alternatively, hosts of sports events would want to determine the best resource allocation permutations for efficiency. In this respect, the data envelopment analysis has been proposed as an appropriate analysis model to evaluate the efficiency of the Brazilian Olympic sports and the best reallocation of the financial resources received for the 2016 Olympic Games in Rio de Janeiro. In using the data envelopment analysis, inputs and outputs are required in order to determine the frontier zone. The proposed inputs in using the data envelopment analysis in the analysis of efficiency in resource allocation in the 2016 Olympic Games in Rio de Janeiro, the inputs are the financial resources advanced for organizing the events and the medals that are offered to winning athletes. This also serves as a proxy for the determination of the inherent difficulty measure of winning one of the many medals on offer (Valerio & Angulo-Meza, 2013). The outputs of the analyses model are the results in terms of podium wins that are awarded gold, silver and bronze medals. A non-radial model of data envelopment analysis is used without weight restrictions in order to inform the efficiency evaluation in Olympic sports. The results of this evaluations show that by using data that contains minimal null medals results in optimal reallocation of financial resources. This is based on sports efficiency and does not require the inclusion of other variables of the imposition of additional weight restrictions (Valerio & Angulo-Meza, 2013). The use of data envelopment analysis in this way is very important for sports organizing events. The successful application of data envelopment analysis in evaluating the sports efficiency of Brazilian Olympic sports opens the way for future hosts to determine the best permutations of different resource allocations in order to ensure that sports events are funded effectively.Conclusion Data envelopment analysis offers a management tool that allows for the manipulation of inputs and outputs in order to determine the best combination in order to get the most outputs using the least number of inputs. This is important in any production system. It tells managers the efficiency frontier at which operations are optimum. The applications of data envelopment analysis also spill over into other fields. In sports management, data envelopment analysis is used to measure the performance of teams, efficiency of resource allocation for hosts of sports events and the economic efficiency of teams playing in national leagues.
Charnes, A., Cooper, W., and Rhodes, E. (1978). Measuring the efficiency pf decision-making units. European Journal of Operational Research, 2:429-444
Cooper, W. W. (2010). Handbook on Data Envelopment Analysis. Berlin: Springer.
Haas, D. (2003). Productive efficiency of English football teams – A data envelopment analysis approach. Managerial and Decision economics, 24: 403-410
Valerio, R. and Angulo-Meza, L. (2013). A data envelopment analysis evaluation and financial resources reallocation for Brazilian Olympic Sports. WSEAS Transactions on Systems. 12 (12):627-637