Evaluating relative value of customers via data envelopment analysis

Abstract

Purpose - The purpose of this paper is to propose a data envelopment analysis (DEA) method for customers' evaluation. Design/methodology/approach - This paper introduces a variable return to scale (VRS) cross-efficiency (one of the DEA models) to evaluate customers. This new model can consider ratio values and give a complete ranking of customers. Findings - It is found that the proposed model can evaluate customers in a multi criteria context; does not demand weights from the decision maker; and can consider both the ratio and absolute numbers. An aggressive form of the VRS model is formulated to evaluate the peer-appraisal value of customers instead of self-appraisal. Originality/value - To the best of the authors' knowledge, there is no reference that uses cross-efficiency model with the ratio values for customers' evaluation.