A Data Envelopment Analysis Approach for Resource Allocation and Reallocation

Resource allocation decisions have always been critical to the success of an organization with a centralized decision-making environment. The central unit is assumed to have the power to allocate available additional resources among its subunits to achieve organizational goals. This article proposes a data envelopment analysis approach based additional resource allocation model in which the original resources of the subunits are not allowed to be reallocated. The aim is to maintain fair allocations to the different units and satisfy effectiveness constraints while produce the maximum amount of available outputs. An iterative algorithm is presented to calculate the maximum outputs with maximum efficiency for a multioutput case. Further, we extend the additional resource allocation model to a resource reallocation model in which the original resources of the subunits are able to be reallocated. An illustrative application of a supermarket chain is given to show the applicability of the proposed method.