We extend Free Disposable Hull (FDH) efficiency analysis towards the general directional distance function framework. The profit interpretation of directional distance functions is extended to the non-convex FDH technologies. In addition, we derive an efficient enumerative algorithm for computing distance measures in Free Disposable Hull (FDH) technologies, which applies to the entire (infinitely large) family of directional distance functions. A simple numerical example and an application to European commercial banks illustrate the algorithm.

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Keywords Data Envelopment Analysis (DEA), Free Disposable Hull (FDH), banks, directional distance function, enumeration
Persistent URL dx.doi.org/1011176325187, hdl.handle.net/1765/6194
Cherchye, L., Kuosmanen, T., & Post, G.T.. (2001). FDH Directional distance functions with an application to European Commercial banks. Journal of Productivity Analysis, 201–215. doi:1011176325187