Centralized resource reduction and target setting under DEA control
Data envelopment analysis (DEA) is a powerful tool for measuring the relative efficiencies of a set of decision making units (DMUs) such as schools and bank branches that transform multiple inputs to multiple outputs. In centralized decision-making systems, management normally imposes common resource constraints such as fixed capital, budgets for operating capital and staff count. In consequence, the profit or net value added of the units subject to resource reductions will decrease. In terms of performance evaluation combined with resource allocation, the interest of central management is to restore the general efficiency value of the DMUs. The paper makes four contributions to the literature: (1) we take into consideration the performance evaluation of the centralized budgeting of hierarchical organizations along with sales and market allocation within manufacturing and distribution organizations; (2) we address the evaluation problems that the central decision maker does not desire to deteriorate the efficiency score of the DMUs after input and/or output reduction; (3) we develop a common set of weights (CSW) method based on the goal program (GP) concept to control the total weight flexibility in the conventional DEA models; (4) we extend a new approach to optimize the inputs and/or outputs contraction such that the efficiency of all DMUs will get bigger than or equal to the efficiency of previous change. We ultimately present a numerical example involving with three inputs and two outputs to illustrate the applicability and efficacy of the proposed approach.
|Date of creation:||22 Feb 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)|
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Li, Yongjun & Yang, Feng & Liang, Liang & Hua, Zhongsheng, 2009. "Allocating the fixed cost as a complement of other cost inputs: A DEA approach," European Journal of Operational Research, Elsevier, vol. 197(1), pages 389-401, August.
- Thompson, Russell G. & Langemeier, Larry N. & Lee, Chih-Tah & Lee, Euntaik & Thrall, Robert M., 1990. "The role of multiplier bounds in efficiency analysis with application to Kansas farming," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 93-108.
- Antreas D. Athanassopoulos, 1998. "Decision Support for Target-Based Resource Allocation of Public Services in Multiunit and Multilevel Systems," Management Science, INFORMS, vol. 44(2), pages 173-187, February.
- Fare, R. & Grabowski, R. & Grosskopf, S. & Kraft, S., 1997. "Efficiency of a fixed but allocatable input: A non-parametric approach," Economics Letters, Elsevier, vol. 56(2), pages 187-193, October.
- Kao, Chiang, 2009. "Efficiency measurement for parallel production systems," European Journal of Operational Research, Elsevier, vol. 196(3), pages 1107-1112, August.
- Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
- Fleurbaey,Marc & Maniquet,François, 2011.
"A Theory of Fairness and Social Welfare,"
Cambridge University Press, number 9780521887427, December.
- repec:cor:louvrp:-2406 is not listed on IDEAS
- E. Thanassoulis & R. Allen, 1998. "Simulating Weights Restrictions in Data Envelopment Analysis by Means of Unobserved DMUs," Management Science, INFORMS, vol. 44(4), pages 586-594, April.
- Duranton, Gilles & Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2010. "The Economics of Clusters: Lessons from the French Experience," OUP Catalogue, Oxford University Press, number 9780199592203, December.
- Yang, Jian-Bo & Wong, Brandon Y.H. & Xu, Dong-Ling & Stewart, Theodor J., 2009. "Integrating DEA-oriented performance assessment and target setting using interactive MOLP methods," European Journal of Operational Research, Elsevier, vol. 195(1), pages 205-222, May.
- Pekka Korhonen & Mikko Syrjänen, 2004. "Resource Allocation Based on Efficiency Analysis," Management Science, INFORMS, vol. 50(8), pages 1134-1144, August.
- Banker, R. D. & Charnes, A. & Cooper, W. W. & Clarke, R., 1989. "Constrained game formulations and interpretations for data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 40(3), pages 299-308, June.
- O. B. Olesen & N. C. Petersen, 1996. "Indicators of Ill-Conditioned Data Sets and Model Misspecification in Data Envelopment Analysis: An Extended Facet Approach," Management Science, INFORMS, vol. 42(2), pages 205-219, February.
- SAATI, Saber & HATAMI-MARBINI, Adel & AGRELL, Per J. & TAVANA, Madjid, . "A common set of weight approach using an ideal decision making unit in data envelopment analysis," CORE Discussion Papers RP 2406, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Cook, Wade D. & Kress, Moshe, 1999. "Characterizing an equitable allocation of shared costs: A DEA approach," European Journal of Operational Research, Elsevier, vol. 119(3), pages 652-661, December.
- Peter Bogetoft, 1993. "Parallelism in Information Production: Moral Hazard and Relative Performance Evaluations," Management Science, INFORMS, vol. 39(4), pages 448-457, April.
- Emrouznejad, Ali & Parker, Barnett R. & Tavares, Gabriel, 2008. "Evaluation of research in efficiency and productivity: A survey and analysis of the first 30 years of scholarly literature in DEA," Socio-Economic Planning Sciences, Elsevier, vol. 42(3), pages 151-157, September.
- Peter Bogetoft, 1994. "Incentive Efficient Production Frontiers: An Agency Perspective on DEA," Management Science, INFORMS, vol. 40(8), pages 959-968, August.
- C. Vaz & A. Camanho & R. Guimarães, 2010. "The assessment of retailing efficiency using Network Data Envelopment Analysis," Annals of Operations Research, Springer, vol. 173(1), pages 5-24, January.
- Peter Bogetoft, 2000. "DEA and Activity Planning under Asymmetric Information," Journal of Productivity Analysis, Springer, vol. 13(1), pages 7-48, January.
- Boaz Golany & Eran Tamir, 1995. "Evaluating Efficiency-Effectiveness-Equality Trade-Offs: A Data Envelopment Analysis Approach," Management Science, INFORMS, vol. 41(7), pages 1172-1184, July.
- Green, Rodney H. & Doyle, John R. & Cook, Wade D., 1996. "Efficiency bounds in Data Envelopment Analysis," European Journal of Operational Research, Elsevier, vol. 89(3), pages 482-490, March.
- Yan, Hong & Wei, Quanling & Hao, Gang, 2002. "DEA models for resource reallocation and production input/output estimation," European Journal of Operational Research, Elsevier, vol. 136(1), pages 19-31, January.
- Charnes, A. & Cooper, W. W. & Huang, Z. M. & Sun, D. B., 1990. "Polyhedral Cone-Ratio DEA Models with an illustrative application to large commercial banks," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 73-91.
- Freed, Ned & Glover, Fred, 1981. "Simple but powerful goal programming models for discriminant problems," European Journal of Operational Research, Elsevier, vol. 7(1), pages 44-60, May.
- Athanassopoulos, Antreas D. & Lambroukos, Nikos & Seiford, Lawrence, 1999. "Data envelopment scenario analysis for setting targets to electricity generating plants," European Journal of Operational Research, Elsevier, vol. 115(3), pages 413-428, June.
When requesting a correction, please mention this item's handle: RePEc:cor:louvco:2013005. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alain GILLIS)
If references are entirely missing, you can add them using this form.