Allocating Fixed Costs: A Goal Programming Model Based on Data Envelopment Analysis

Abstract

Today the most organizations (e.g. banks and insurance institutes) consist of the various units which under the control of the main organization (unified management) act independently. Sometimes the manager presents some services which incur costs such as advertisement and introducing a new technology. <br /> Most organizations consist of several individual units. Resource allocation issue appears when requiring to determine an equitable share of costs for these independent units. Data Envelopment Analysis has been proved as a useful technique to solve allocation problems. <br /> This paper presents a linear programming model based on DEA methodology to find an equitable allocation. To compare obtained results, we use the proposed model to a data set of prior studies.