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On the Egalitarian–Utilitarian spectrum in stochastic capacitated resource allocation problems

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  • Li, Linda
  • Firouz, Mohammad
  • Ahmed, Abdulaziz
  • Delen, Dursun

Abstract

In this paper, we study a generalized resource allocation problem where a limited resource is to be allocated to a set of agencies with stochastic receiving capacities while taking into account the decision-maker’s preference towards equity in allocation. Taking the empiric distributional nature of the capacities into account, we formulate the problem in a chance-constrained based Mixed-Integer Programming framework with user-specified reliability and tolerance levels as well as equity preference level. We show that the problem can be conveniently reduced to a linear equivalent with adjusted capacity constraints. Deriving the tightest lower and upper bounds corresponding to the utilitarian and egalitarian perspectives, respectively, we give the closed-form optimal solutions for such cases. Using real data, we test the behavior of our model with a view towards the inherent equity-efficiency as well as reliability-efficiency trade-offs. We further characterize the cost and value of information in a detailed analysis.

Suggested Citation

  • Li, Linda & Firouz, Mohammad & Ahmed, Abdulaziz & Delen, Dursun, 2023. "On the Egalitarian–Utilitarian spectrum in stochastic capacitated resource allocation problems," International Journal of Production Economics, Elsevier, vol. 262(C).
    • Handle: RePEc:eee:proeco:v:262:y:2023:i:c:s0925527323001329
    DOI: 10.1016/j.ijpe.2023.108900
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