Proposing a Model of Efficiency Evaluation Based on the Adjusted Range Measurement Model and Weight Restrictions (Case Study: Branches of Iran Insurance Company)

Document Type : Research Paper


1 Associate Prof. of Accounting, Faculty of Management, University of Tehran, , Iran

2 PhD Candidate of Operations Research, Farabi Campus, University of Tehran, , Iran

3 PhD Candidate of Industrial Engineering, Iran University of Science & Technology, , Iran


Objective: One serious drawback of the application of data envelopment analysis in insurance firm efficiency evaluation has been the absence of decision-maker and experts’ opinions, allowing total freedom while allocating weights to input and output data of insurance firms under analysis. This allows insurance firms to achieve artificially highly efficient grants by ignoring some important inputs and outputs.
Methods: The most widespread method for considering decision-maker and experts’ opinions in data envelopment analysis models is, perhaps, the weight restrictions inclusion. Weight restrictions allow for the integration of decision maker and experts’ opinions and controlling the range of weight changes in Data Envelopment analysis. Therefore, in this paper, an adjusted range measurement model considering the weight restrictions once and not considering weight restrictions later is used.
Results: The average efficiency of the adjusted range measurement model with and without considering the weight restrictions is 0.927 and 0.959, respectively. The number of efficient branches in the presence of weight restrictions has decreased from 71 units to 24 units representing the impact of these restrictions.
Conclusion: This article intended to propose a new data envelopment model regarding an adjusted range measure and considering the weight restrictions and the model was tested on Iran insurance company.


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