Intelligent business analytics using proposed input/output oriented data envelopment analysis DEA and slack based DEA models for US-airlines

Abstract

The study presents Proposed Data Envelopment Analysis (DEA) approaches for intelligent business analytics of the US Airline industry to gain more knowledge, control, flexibility and trade-off among various inputs to the system/industry. Three new proposed DEA models are presented. The results obtained provide credible data analytics and intelligent business suggestions. Firstly the proposed input oriented and the proposed output oriented DEA models are formulated. The proposed input oriented DEA model suggests how resource utilization can be minimized while operating in with the same output level. Further, the proposed output oriented model suggests how output efficiency can be increased to a benchmark level while keeping the input at the same level. Then the proposed Slack Based DEA model SBM is formulated. The proposed models are then solved with the DEA Excel Solver for finding the efficient points in the Pareto Frontier. Representing the Pareto Frontier as a function of total system revenue gives necessary information about the inputs growth and their trade-off with the output. Furthermore, the proposed Slack Based DEA model (SBM) intelligently measures the technical efficiency of each airline. The results show that three airlines namely American, United and Jet Blue are weakly efficient operating below the proposed SBM efficient frontier. Furthermore, the results intelligently suggest the possible inputs reduction and outputs increases to get to the efficient frontier for the management of the concerned airlines. The proposed SBM slacks suggest the possible areas of improvement for future planning and optimal operating input/output levels for the top management of the weakly efficient airlines.