Centralized Resource Allocation and Target Setting Based on Data Envelopment Analysis Model

Abstract EN

This paper aims to develop a data envelopment analysis (DEA) based model for allocating input resources and deciding output targets in organizations with a centralized decision-making environment, for example, banks, police stations, and supermarket chains.

The central decision-maker has an interest in maximizing the total output production and at the same time minimizing the total input consumption.

Traditionally, all decision-making units (DMUs) can be easily projected to the efficient frontier, which is a mathematical feasibility; however, it does not guarantee the managerial feasibility during the planning period.

In this paper, we will take potential limitations of input-output changes into account by building a difficulty coefficient matrix of modifying their production in the current production possibility set so that the solution guarantees managerial feasibilities.

Three objectives, namely, maximizing aggregated outputs, minimizing the consumption of input resources, and minimizing the total difficulty coefficient, are proposed and incorporated into the formation of resource allocation and target setting scheme.

Building on this, we combine DEA and multiobjective programming to solve the resource allocation and target setting problem.

In the end, we apply our proposed approach to a real-world problem of sixteen chain hotels to illustrate the efficacy and usefulness of the proposed approach.