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Abstract

The methodology of free disposal hull (FDH) is presented in this paper as an alternative method of benchmarking based on the concept of the evaluation of technical efficiency measures. It is considered as a non-convex counterpart to data envelopment analysis measures (DEA). The four measures of technical efficiency (TE) are calculated in this paper as benchmark indicators on the basis of dairy farms data sample: constant returns to scale technical efficiency (TE), non-increasing returns to scale TE, variable returns to scale TE, and FDH technical efficiency. The observed analysis shows that frequency of efficient farms increases with the order of TE measures listed above.

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