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Advances in Decision Sciences
Volume 2011 (2011), Article ID 505241, 11 pages
http://dx.doi.org/10.1155/2011/505241
Research Article

A General Input Distance Function Based on Opportunity Costs

Center of Operations Research (CIO), University Miguel Hernandez of Elche, 03202 Elche, Spain

Received 3 August 2011; Revised 14 December 2011; Accepted 25 December 2011

Academic Editor: Wing Keung Wong

Copyright © 2011 Juan Aparicio and Jesus T. Pastor. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

There are several distance function definitions in a general production framework, including Data Envelopment Analysis, which can be used to describe the production technology and to define corresponding measures of technical efficiency (notably the Shephard and the directional distance functions). This paper introduces a generalisation of the distance function concept based on the idea of minimizing firm's opportunity cost. We further state a general dual correspondence between the cost function and this new general distance function, which encompasses all previously published duality results. All our results also hold under the assumption that we work in a Data Envelopment Analysis context.