Investment projects ranking with DEA method considering feasibility study results

Abstract

According to the increasing need of industry to financiers and investors in order to incorporate and encouraging them to invest in various fields of industry, the necessity of a method to help investors for making a decision has emphasized. We present a method which tries to omit to apply personally partial views in making a decision in order to make the results more reliable. This paper focuses on ranking investing opportunities. The strategy which has used is the Data Envelopment Analysis that the 4 main sub-models including Charnes, Cooper & Rhodes (CCR) model, Input Oriented Banker, Charnes & Cooper (BCC) model, Output Oriented BCC model, and Additive model have been utilized. The contribution of this research is using 4 DEA models for ranking projects in terms of feasibility whereas in the similar researches, as what found in the literature, the mentioned models have not been taken into account simultaneously. The developed model is applied in an Iranian investment company which has 15 investment opportunities that we have evaluated and ranked them based on 5 financial indices with DEA mechanism. Our approach can be performed by any investment company or financier to rank their investment projects considering feasibility study results of each investment opportunity.