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A New Approach for Fixed Cost Allocation in DEA Based on the Value Efficiency Analysis

Authors

Javad Gerami * Department of Mathematics, Shiraz branch, Islamic Azad University, Shiraz, Iran.

https://doi.org/10.22105/raise.v1i3.58

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Abstract

Fixed cost allocation among Decision-Making Units (DMUs) should be based on a fair plan. This paper presents a new approach based on value efficiency analysis. In this regard, we first calculate the value efficiency scores of the DMUs by selecting the Most Preferred Solution (MPS) units. These units can be the units that have the best performance from the Decision-Maker (DM) point of view. In the following, we present an algorithm for providing a fixed cost allocation plan among DMUs based on the value efficiency analysis in Data Envelopment Analysis (DEA). Fixed cost allocation is done by choosing the efficiency invariance strategy. Value efficiency analysis was used to design a fixed cost allocation plan using the DMs preferred information.

Keywords

Data envelopment analysis Fixed cost allocation Value efficiency Efficiency invariance

References (26)

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Published 2024-09-18
Issue Vol. 1 No. 3 (2024): Research Annals of Industrial and Systems Engineering
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How to Cite

Gerami, J. . (2024). A New Approach for Fixed Cost Allocation in DEA Based on the Value Efficiency Analysis. Research Annals of Industrial and Systems Engineering, 1(3), 171-181. https://doi.org/10.22105/raise.v1i3.58

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