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Centralized Resource Allocation Based on the Bargaining Approach

Author

Listed:
  • Lei Fang

    (Business School, Nankai University, Tianjin 300071, P. R. China)

  • Hecheng Li

    (School of Mathematics and Statistics, Qinghai Normal University, Xining 810016, P. R. China)

  • Zhongbin Wang

    (Business School, Nankai University, Tianjin 300071, P. R. China)

Abstract

In a centralized decision-making environment, the central unit supervises all the operating units’ production activities and focuses on achieving the overall goals of the entire organization from a global viewpoint by allocating available resources to them. However, all the current models about resource allocation under the centralized decision-making commonly exhibit the non-unique optimal solutions and neglect the competition and trade-off among all the DMUs to maximize the individual aggregated output of each DMU. This phenomenon makes the allocation result imbalanced and unacceptable to all the DMUs. To overcome this problem, this paper introduces Nash bargaining game theory to develop a new centralized resource allocation model which not only takes into account the overall goals of the organization from an overall perspective, but also considers competition and trade-off among all the DMUs. Finally, an empirical example is used to demonstrate the applicability of our proposed approach. The results show that our Nash bargaining game model not only guarantees the uniqueness of the optimal resource allocation results, but also improves the balance of the resource allocation result, which makes it acceptable to all the DMUs.

Suggested Citation

  • Lei Fang & Hecheng Li & Zhongbin Wang, 2021. "Centralized Resource Allocation Based on the Bargaining Approach," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 38(02), pages 1-18, April.
    • Handle: RePEc:wsi:apjorx:v:38:y:2021:i:02:n:s0217595920500499
    DOI: 10.1142/S0217595920500499
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    Cited by:

    1. Gupta, Anshu & Pachar, Nomita & Jain, Akansha & Govindan, Kannan & Jha, P.C., 2023. "Resource reallocation strategies for sustainable efficiency improvement of retail chains," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).
    2. Lozano, Sebastián & Contreras, Ignacio, 2022. "Centralised resource allocation using Lexicographic Goal Programming. Application to the Spanish public university system," Socio-Economic Planning Sciences, Elsevier, vol. 84(C).

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