Benchmarking large U.S. retailers using a data envelopment analysis model

In this chapter, we illustrate the use of data envelopment analysis, an operations research technique, to analyze the financial performance of the seven largest retailers in the United States by benchmarking a set of financial ratios of a firm against its peers. Data envelopment analysis clearly brings out the firms that are operating more efficiently in comparison to other firms in the industry, and points out the areas in which poorly performing firms need to improve.