A practical solution based on the principal component analysis to the indecision problem in determination of inputs and outputs in the data envelopment analysis
Data Envelopment Analysis (DEA) is one of the techniques widely used in the relatively efficiency evaluation of decision making units based on multiple inputs and outputs. The inputs and outputs to be included to the model play an important and determinant role in this process where the relative efficiency of decision units is evaluated with an approach based on a mathematical programming. In this study, in case of indecision problem in determination of inputs and outputs to be included to the model, several acquirable advantages of the use of Principal Component Analysis (PCA), as one of the multivariate statistical analyses techniques, within the process of DEA are going to be presented. With this scope, the financial efficiency of the district municipalities serving in Istanbul will be investigated as the case study.