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The fair allocation of common fixed cost or revenue using DEA concept

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Abstract

The common fixed cost or revenue distribution amongst decision making units (briefly, DMUs) in an equitable way is one of the problems that can be solved by data envelopment analysis (DEA) concept. The motivation of this paper is common fixed cost or revenue allocation based on following three principles: First, allocation must be directly proportional to the elements (inputs and outputs) that are directly proportional to imposed common fixed cost or to obtained common fixed revenue. Second, allocation must be inversely proportional to the elements that are inversely proportional to common fixed cost or revenue. Finally, the elements that have no effect on common fixed cost or revenue must have no effect on allocation as well.

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Acknowledgements

The authors would like to thank Professor Wade D. Cook for his constructive comments on this paper.

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Authors and Affiliations

  1. Department of Mathematics, Faculty of Science, Lorestan University, Khorram Abad, Iran

    M. Khodabakhshi & K. Aryavash

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  1. M. Khodabakhshi
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  2. K. Aryavash
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Correspondence to M. Khodabakhshi.

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Khodabakhshi, M., Aryavash, K. The fair allocation of common fixed cost or revenue using DEA concept. Ann Oper Res 214, 187–194 (2014). https://doi.org/10.1007/s10479-012-1117-2

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  • DOI: https://doi.org/10.1007/s10479-012-1117-2

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