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Li, Yongjun; Yang, Feng; Liang, Liang; Hua, Zhongsheng

Allocating the fixed cost as a complement of other cost inputs: A DEA approach. (English) Zbl 1157.91390

Eur. J. Oper. Res. 197, No. 1, 389-401 (2009).
Summary: In cost allocation problem, traditional DEA approaches allocate the fixed cost among a group of decision making units (DMUs), and treat the allocated cost as an extra input of each DMU. If costs except for the fixed cost are regarded as inputs in the cost allocation problem, then it is obvious that the fixed cost is a complement of other inputs rather than an extra independent input. Therefore it is necessary to combine the allocated cost with other cost measures in cost allocation problem. Based on this observation, this paper investigates the relationship between the allocated cost and the DEA efficiency score and develops a DEA-based approach to allocate the fixed cost among various DMUs. An example of allocating advertising expenditure between a car manufacturer and its dealers is presented to illustrate the method proposed in this paper.

Cited in 29 Documents

MSC:

91B32 Resource and cost allocation (including fair division, apportionment, etc.)
90C59 Approximation methods and heuristics in mathematical programming

Keywords:

data envelopment analysis (DEA); cost allocation; multiple-objective program; super efficiency

Software:

Excel
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Full Text: DOI

References:

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