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Allocating the fixed cost: an approach based on data envelopment analysis and cooperative game

Author

Listed:
  • Yongjun Li

    (University of Science and Technology of China)

  • Feng Li

    (University of Science and Technology of China)

  • Ali Emrouznejad

    (Aston University)

  • Liang Liang

    (University of Science and Technology of China
    Hefei University of Technology)

  • Qiwei Xie

    (CAS Center for Excellence in Brain Science and Intelligence Technology)

Abstract

Allocating the fixed cost among a set of users in a fair way is an important issue both in management and economic research. Recently, Du et al. (Eur J Oper Res 235(1): 206–214, 2014) proposed a novel approach for allocating the fixed cost based on the game cross-efficiency method by taking the game relations among users in efficiency evaluation. This paper proves that the novel approach of Du et al. (Eur J Oper Res 235(1): 206–214, 2014) is equivalent to the efficiency maximization approach of Li et al. (Omega 41(1): 55–60, 2013), and may exist multiple optimal cost allocation plans. Taking into account the game relations in the allocation process, this paper proposes a cooperative game approach, and uses the nucleolus as a solution to the proposed cooperative game. The proposed approach in this paper is illustrated with a dataset from the prior literature and a real dataset of a steel and iron enterprise in China.

Suggested Citation

  • Yongjun Li & Feng Li & Ali Emrouznejad & Liang Liang & Qiwei Xie, 2019. "Allocating the fixed cost: an approach based on data envelopment analysis and cooperative game," Annals of Operations Research, Springer, vol. 274(1), pages 373-394, March.
    • Handle: RePEc:spr:annopr:v:274:y:2019:i:1:d:10.1007_s10479-018-2860-9
    DOI: 10.1007/s10479-018-2860-9
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