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On the Egalitarian–Utilitarian spectrum in stochastic capacitated resource allocation problems

Linda Li, Mohammad Firouz, Abdulaziz Ahmed and Dursun Delen

International Journal of Production Economics, 2023, vol. 262, issue C

Abstract: In this paper, we study a generalized resource allocation problem where a limited resource is to be allocated to a set of agencies with stochastic receiving capacities while taking into account the decision-maker’s preference towards equity in allocation. Taking the empiric distributional nature of the capacities into account, we formulate the problem in a chance-constrained based Mixed-Integer Programming framework with user-specified reliability and tolerance levels as well as equity preference level. We show that the problem can be conveniently reduced to a linear equivalent with adjusted capacity constraints. Deriving the tightest lower and upper bounds corresponding to the utilitarian and egalitarian perspectives, respectively, we give the closed-form optimal solutions for such cases. Using real data, we test the behavior of our model with a view towards the inherent equity-efficiency as well as reliability-efficiency trade-offs. We further characterize the cost and value of information in a detailed analysis.

Keywords: Chance-constrained programming; Efficient frontier; Egalitarian; Resource allocation; Stochastic capacities; Utilitarian (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:262:y:2023:i:c:s0925527323001329

DOI: 10.1016/j.ijpe.2023.108900

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